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Space-change: satellites, crypto and The Central African Republic

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This is the first article in a speculative three-part series with Spacechain exploring how decentralised systems in space may begin to stimulate innovation and solve on-the-ground issues across a wide range of scenarios.

On the 27th April 2022, the Central African Republic announced its plan to join El Salvador in becoming only the second country to make crypto legal tender with its Sango coin whitepaper. The move was baffling given the timing of the announcement: in the middle of a crypto crash and against a backdrop of widespread protests against El Salvador’s adoption of the currency.

On closer analysis, it made even less fiscal sense than before. Where 58% of El Salvador accessed the internet in 2019, in the Central African Republic, internet access isn’t at much more than 10% and only 37% of the country has a mobile phone. How, after all, can one use a digital currency if there is no infrastructure to use it with? As previously covered by David Whitehouse for DisruptionBanking, the likely motivation here is corruption.

Control & Currency

That being said, this didn’t necessarily have to be the case. It should be possible for states to roll out their own cryptocurrencies successfully where necessary, and there are convincing arguments in favour of this.

For the Central African Republic and many others, control is a key issue. The Central African Republic uses the Central African Franc (CFA), alongside thirteen other Western and Central African States. Unlike the Euro, the CFA is not a sign of economic cooperation, but instead a colonial legacy established by the French. France remains a guarantor of the currency, and that has enabled them to maintain economic control over the region long after their departure. With a lack of control over a central bank, it has in effect kneecapped any growth and control over fiscal policy.

The tight control of inflation under the CFA has been described as a “monetary straightjacket by economist James Wilson and has enabled capital to be easily transferred to France. It appears the CFA’s current organisation simply isn’t appropriate for low-income countries. Nevertheless, risk of destabilisation has made change difficult. It is against this background that the Central African Republic is seeking reform, in essence hoping to achieve a partial monetary freedom.

Macron has promised reform, removing French representatives from the board of the central bank alongside the requirement to place half of reserves at the French treasury. It is even set to rename the currency Eco (Economic Community of West African States) in 2027, but many have argued this isn’t enough. Ndongo Samba Sylla, a Senegalese economist has described these reforms as “largely symbolic.” The issues do not stop there, due to the recent poor performance of the Euro, the currency is set to suffer further.

Decolonising Currency & The Internet

It makes sense then that currency is emblematic of retaking control for the state, which currently ranks 183rd in the Human Development Index (HDI) despite strong mineral resources. The success or failure of such a scheme is of wider relevance, not only to those within the CFA zone, but also other nations in similarly precarious or tied currency arrangements. Where in truth the success of such a scheme cannot be guaranteed, much can be done to help improve its deployment. The issue is that the countries which may benefit the most from using such currencies are rarely those with the best internet coverage.

In sparsely populated nations, where mobiles are overwhelmingly preferred to computers, traditional internet infrastructure consisting of cabling and transmitters is too slow and expensive to rollout. The Central African Republic is no exception: it is 15% larger than France but with a population around 14 times smaller. For the Central African Republic, using cryptocurrency to catalyse growth in internet usage could be extremely beneficial for the local economy, provided it is rolled out correctly. But reforms would need to be made.

SpaceChain’s Solution

SpaceChain, who are currently in conversation with another unnamed government to roll out a similar solution, have been exploring whether satellites and handheld devices (which at 37% penetration are already far more widely used) could enable a change in currency rollout. DisruptionBanking spoke to Ziheng Xiang, Technology Manager at SpaceChain to find out more.

Why can’t satellites alone solve this problem? While internet from Low-Earth and Geostationary satellites do provide signal from space, they require ground-terminals to distribute this signal. Where those terminals are lacking, there is an issue.

SpaceChain’s solution is to use direct satellite connection through a handheld device. It is this which will allow a handheld device (which looks not too different from a Blackberry) to forward secure transaction data directly from networks of satellites through blockchain infrastructure.

This will enable networking between different satellite companies, allowing data level collaboration. Furthermore, this data can be wired between satellites to ground-stations in different countries, enabling a radical change in the way we view connectivity. Here information including communications are packed into a blockchain transaction and sent between satellites. Whilst initial rollout will be primarily transaction based, this could eventually lead to internet access without a ground station. In areas which are remote or have infrastructure difficulties, this will likely be game changing and extremely cost effective.

Rollout

Whilst details such as pricing for the device have not yet been finalised, this could enable a much wider rollout of alternative currency solutions across a range of different scenarios. Rollout is set to begin with a digital application in 2023, followed by devices in 2024, and infrastructure in 2025.

Of course there are risks to this scheme. The first is that such a system could create a two-tier currency, but as the other currency is tied to much larger nations, in the case of the Central African Republic, this may not be as big an issue as one might think. More pressing is whether this technology will be affordable for poorer members of society and whether the government genuinely want a wide rollout.

Whilst price will certainly decrease over-time and with scale, this will be the biggest hurdle if we are to see the dream of decentralised transactions, currency solutions, and even internet roll-out effectively within countries such as the Central African Republic. However, in the long-run, it could be cost saving. Data prices in the Central African Republic are around $9.03 per gigabyte, the 7th most expensive on the continent, and thus the demand for such a solution may be greater than initially thought.

With normal mobile devices, huge infrastructure investment may need to be delivered in order to reduce this. For comparison, in Nigeria, the cost is around 88 cents, and in the UK, around $1.42. Both countries have significantly higher average incomes and have invested billions in their networks. For the Central African Republic, where GDP per capita is around $500 per annum, technology like this might not provide instant change, but it certainly may improve their chances in the future.

Nevertheless, it is through this that we also begin to see how the future will begin to look. With this innovation we are beginning to see how adoption of blockchain technologies might force companies into collaboration in handling data. It is this that may alter the ways in which we view competition within network infrastructure forever.

Author: Alex Joseph

#CAR #Blockchain #Space #SpaceChain #Crypto

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