Africa’s first stablecoin, the Africa Stable-Coin(ABCD) is backed by Nigeria’s national currency, the Naira. Also, the fiat-backed crypto is built on Binance’s native blockchain, the Binance Chain.
The crypto momentum in Africa doesn’t seem to die down. Budding startups are leveraging blockchain and decentralized ledger technology to create novel applications that will change the future of finance on the continent.
Africa Stable-Coin is the brainchild of Ghana-based cross-border money transfer startup Bit Sika. According to reports, the project was fulfilled in collaboration with Linovo Capital was unveiled just last week.
It got enrolled in the Binance Labs Incubation Program earlier this year. Bit Sika CEO Atsu Davoh even met Jack Dorsey, when the Twitter chief was on his trip to Ghana. Now we know who was the person from Jack’s Ghana Bitcoin meetup picture which got circulated a lot citing his interest to grow Africa’s BTC and crypto ecosystem.
So What’s the ABCD Stablecoin All About?
According to the project’s whitepaper:
The Africa Stable-Coin ($ABCD) is a cryptographic token that is (i) issued by a trust company, $ABCD Collective, (ii) strictly pegged 1:1 to a real world asset, fiat currency (Nigerian Naira), and (iii) built on the Binance Chain network [1], a Byzantine Fault Tolerant and Proof of Stake consensus network, via its token issuance model.
The text also mentions ABCD combining Naira’s high liquidity and Nigeria’s high population with the ‘technological advancements in cryptocurrency’. It is a stablecoin token made for use on the Binance Chain just like TrustToken‘s tokenized versions of USD, GBP, AUD, CAD, and HKD.
“Africa Stable-Coins ($ABCD) are created at the time of withdrawal from $ABCD Collective and redeemed or “destroyed” at the time of deposit back”, the whitepaper adds.
Project founder Atsu feels that the Naira stablecoin has a lot more usage other than allowing users to purchase crypto with their local currencies. According to him,
“Many people have a hard time differentiating cryptocurrencies and knowing their actual value in their local currency. There are a lot of digital currencies backed by the US dollar. We have seen how well they do.
But I feel we also need cryptocurrencies that are compatible with African national currencies. People can easily acquire US dollars, but still choose to spend their local currencies. This illustrates the power of familiarity, which we aim for”
But Why Peg to the Naira?
Bitcoin and cryptocurrency enjoy immense popularity in Nigeria, Africa’s largest economy. The Central Bank of Nigeria (CBN) has warned that digital currencies are not legal tenders but Nigerians don’t seem to care.
Binance Research’s Analysis of BTC’s Google search heat rankings by country/region from 2011 till September of this year revealed that Nigeria and South Africa have been ‘bitcoin hotspots’ of the world since 2017.
Actually this is what drove Binance to launch its first fiat trading pair with the Naira. As per Davoh,
“Nigeria is one of the busiest places for cryptocurrency in Africa right now, and while we have plans to include other African currencies in the future, the country is a good starting place for us”
A Few More Things about the Binance Chain Powered ABCD
To ensure trust around ABCD’s usage, issuer ABCD Collective’s funds will be audited by an independent Certified Public Accountant at the end of every month.
The Binance chain powered stablecoin is supported by 9 cryptocurrency exchanges – Busha and Bitmama.
What do you think about Africa’s first stablecoin? Add your thoughts in the comments below.
Image via Shutterstock