Special feature (Part three): Blockchain – Decentralisation is already here

iOCO CFO Jo-Ann Pöhl highlights how e-wallets have already formalised the concept of decentralised money.

Read more: Special feature (Part one): Blockchain – All hype or a game changer?
Read more: Special feature (Part two): Blockchain – From blood diamonds to digital identity

Jo-Ann Pöhl, iOCO group CFO, points out that the internet has allowed us to digitise currency and its exchange, so the shift to decentralisation has already happened – albeit in places where weaknesses provide opportunities. “Mobile wallets in some areas of Africa have replaced or superseded weaker banking sectors,” she says.

Jo highlights that e-wallets and other walled-off value exchange platforms, which are already in our market, have formalised the concept of decentralised money or value tokens.

“Is anybody certain about what is being exchanged when someone sends someone else airtime? You can call them vouchers, tokens, or coins, but these are digital currencies, and we are already comfortable exchanging them, because we understand the value they hold and we can unlock and use that value.”

What we don’t have yet, adds Jo, is interoperability, because this is what is licensed and controlled. “Governments, as the underwriters of currencies, will be impacted by this and when we see legislation such as open banking in Europe and similar changes in other markets, we begin to recognise that trying to protect these walls or barriers to entry will not stop this fundamental shift from continuing.”

Thanks to an insatiable appetite for cryptocurrency – at the start of this year, the daily value of crypto-asset trading exceeded R2 billion for the first time in South Africa – a decentralised finance system is now running parallel to the traditional system, as peer-to-peer transactions are gaining ground over banking. And as crypto-assets become increasingly popular, so has talk of regulation become louder: a much-needed step, as currently cryptocurrency investors have no protection. Just look at Africrypt, where two South African brothers skipped the country and disappeared into the ether, taking Bitcoin investments worth an estimated R43 billion with them.

“You cannot discount the negative publicity and hype around cryptocurrencies, and there is a view that cryptocurrencies facilitate underworld trade for nefarious purposes,” says Jo. “It does affect perceptions that the blockchain centres on hiding things when the opposite is true. Blockchains are about privacy; they are intended to create immutable records underpinned by proof points. They create places of absolute surety with the fundamental core principle of enabling trust in transactions.”

Read more: Special feature (Part four): Blockchain – It’s a question of trust

You can read the full Special Feature in the third edition of the 2021 CFO Magazine