African Angel Investors and Cryptocurrency Investments

Cryptocurrencies and the blockchain technology that underpins them have been around for a while. Unfortunately, a proper understanding of crypto and its use cases often elude angels partly because cryptocurrency trading became mainstream and many lost their savings. To be clear, any form of liquid trading is highly risky and requires deep expertise and an often institutional-level edge. So it isn’t surprising that most people lost much value trying to play those markets. However, we are concerned that much like the plague passed over the Jews in the Holocaust that killed the Egyptians, angels “pass over” any deck containing cryptocurrency or blockchain technology.

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A rare sighting of an angel viewing a crypto-related deck

As technology investors, angels should be more forgiving and open-minded regarding new tech. The internet is a constant reminder of this, which many experts in the 90s doubted. In reality, the next global trillion-dollar companies will likely be built on the back of Artificial Intelligence, Web3, and Augmented/ Virtual Reality. However, many angels (and broadly human beings) often have issues coming to terms with these new concepts because they need help understanding the technology stack of the current times. Still, move we must, lest we get left behind -as Africa often has. This article attempts to explain simply the use cases for blockchain technology and cryptocurrency and open up minds to the possibilities of future technology.

  1. Distributed Computing

Put simply, distributed computing is the method of computing that allows multiple computers to work together to solve complex problems as though they were one supercomputer. The peer-to-peer distributed computing system is how blockchain tech works and how cryptocurrencies are produced and managed. For example, distributed systems can render high-quality, three-dimensional video animation and encrypt large volumes of data. In addition, distributed systems are generally more scalable (nodes can be added in proportion to computing demand), transparent, secure, and efficient. 

Ethereum, the cryptocurrency more commonly known for falling in value by 63% since November 2021, holds the unofficial status as the “world computer” for decentralized applications (DApps), popularizing smart contracts, and the introduction of the ERC20 standard for tokens. Moreover, its network currently provides the world’s leading platform for distributed computing.

2. Connecting Resources in The Internet of Things

For those unfamiliar with the internet of Things, it simply describes the placement of devices on appliances or machines so that they collect information such as environmental parameters and communicate them through a communications network. IOTA is a cryptocurrency with an architecture called the IOTA Tangle, an innovative type of Distributed Ledger Technology (DLT) specifically designed for the internet of things. I.e., IOTA is the communications network through which the Internet of Things function. 

One use case for IOTA, which is already underway in real life, is IOTA’s partnership with a prominent car manufacturer to test employing “smart wallet” technology where drivers can earn credits that they use to digitally pay road tolls, smart charging or parking fees using their mobile phones. They receive these credits by enabling their vehicles to report data on road conditions to entities such as highway departments, road maintenance authorities, and others.

3. Tokenization and NFTs

Tokenization refers to the value placed on a fractionalized asset. For example, many companies today are democratizing access to investments in alternative assets like Real Estate ( Piggyvest, Risevest, Squareroof); tokenization allows users to convert their ownership of an asset into a token that can be used to transact in the digital world. They may also choose to keep these tokens as an appreciating store of value until there’s a liquidation event or they’d like to sell. 

NFTs (Non-Fungible Tokens) also have the same application. However, the critical part of these tokenized assets is that they can’t be duplicated, replaced, or further divided, as each NFT is unique. NFTs are commonly stored on the Ethereum and Solana (cryptocurrency) blockchains. My favorite use case for NFTs is in entertainment/media tech for creators. A common saying among founders is that customers are the best investors, which is true.

NFTs offer a way for creators to sell their work directly to fans without going through intermediaries. This allows artists to retain a more significant share of the profits from their work. Smart contracts can also embed a royalty component, meaning the artists continue to receive a royalty payment for subsequent art sales over time. Another benefit of NFTs is that their unique nature presents a way to create real scarcity, which is uncommon with digital assets. It can also help to authenticate the record of real-world assets, which can otherwise be altered.

4. Increased credit access

One of cryptocurrency’s most significant use cases is its potential to increase access to credit for individuals and businesses. Firstly, blockchain-based credit platforms can improve access to credit for individuals and companies in Africa. Traditional financial institutions often have strict lending requirements and may not be accessible to everyone. Blockchain-based credit platforms can use intelligent contracts to create a more inclusive and accessible lending process. In addition, these platforms can use algorithms to assess the creditworthiness of borrowers and facilitate peer-to-peer lending, making credit more accessible and affordable.

Cryptocurrencies are gradually transforming the financial landscape in Africa. They offer numerous advantages over traditional economic systems, including faster processing times, lower transaction fees, greater transparency, and security. The adoption of cryptocurrencies can increase financial inclusion, provide better access to credit, facilitate cross-border payments, and protect the value of assets against inflation and currency devaluation. However, there is still a need for better education and awareness of cryptocurrencies in Africa and instilled regulatory frameworks to ensure their safe and secure use.


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Victor Kareem

Victor Kareem

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