Why South Africans are Opting for Bitcoin, Machankura, & the Role of Energy in Sustaining Societies.
Machankura is South African slang for money and a tool to “Bitcoin the un-Bitcoined.”
Photo credit: Annie Spratt
For a long time Bitcoin and the internet have been interconnected. That was until 2022, when a young South African man severed that connection.
Kgothatso Ngako is a South African software developer, bitcoiner, and founder of Machankura — an innovation allowing Africans to send and receive bitcoin via text messaging with a feature phone. No computer, no smartphone, and no internet is needed.
Africans can dial a specific code by country. From there, they can follow prompts to send or receive bitcoin, check their balance, and go onto Bitrefill to barter bitcoin for goods and services.
It does this by using USSD (Unstructured Supplementary Service Data), which is a protocol typically used in telecommunications networks for sending short text messages.
To help visualize this: Think of a time when you called a service provider and they told you which number to press for service. Machankura is like that, except that it does this via texting only.
Another cool feature of Machankura is that it interacts with the Lightning Network, Bitcoin’s secondary layer that allows for instantaneous and almost free bitcoin transactions.
With Machankura, Africans in rural areas can have an accessible, affordable, and quick way to interact with bitcoin.
In a continent that struggles with reliable internet access and financial opportunities, Machankura is an opportunity for Africans in poor and developing areas to bank themselves with bitcoin. Imagine the impact that will have in the years to come!
I wanted to learn more about this so I invited Kgothatso over to The Misfit podcast. I hope his experience living in South Africa, his arguments for energy if you want a thriving society, the stories he shares with me, and his work with Machankura expand your understanding of the world and how Bitcoin can be a force for good.
Listen to the conversation on Spotify or Fountain.
(Below is an excerpt of the interview, but I encourage you to listen to the full interview here.)
Tell me about what's going on with the power outages in South Africa because that's part of the reason why we had to reschedule the call.
Kgothatso Ngako: “Well, we have regular power outages. I think at least eight hours a day is spent without electricity. They release the schedule so at least you can plan ahead. But it's not been this bad. We've been having power outages over the past decade. It actually used to be two hours a day. But it's been getting worse and worse and worse and worse. So it feels like sabotage. But you know, central planning doesn't work anyway. So I guess it's one of those things.”
But these are done on purpose, right? So that the (energy) grid doesn't collapse.
Kgothatso Ngako: “That's what they say. But technically what they should have done is build more power stations so that the grid can support all the demand. But then it seems like all these new power stations keep having faults and they cannot be fully added to the grid. So there's also that.”
I was reading about the effects of the power outages in South Africa. You know, food going bad, the bad traffic that it's causing, some homeless people trying to direct traffic for cash, students not being able to study. Even as far as dead bodies rotting faster and people being asked to bury their loved ones as fast as possible. It makes you realize how, when you cut out energy, the huge effects it has across a whole society.
Kgothatso Ngako: “Well… Quality of life increases with more energy usage, right? So everything you just listed, I think at this point in time we ignore. It's like your own breathing. You don't even notice it until you stop breathing or something keeps you from breathing and being strangled.
With energy consumption there's this whole push for renewable energy. But the thing that we should be focusing on is generating as much energy as possible and getting people to live life with higher living standards. So whatever that energy is – for now – shouldn't be the focus because otherwise all the things you listed are happening and will continue to happen even in other places…
Nuclear is one of the things that are highly regulated for not so obvious reasons. If we really want to not be wasting energy we should be using it in the most efficient fashion. And nuclear is one of the most efficient ways you could ever use energy because, as Einstein put it, E is equivalent to mc2. So, if you get the most energy out of the smallest mass, or well fuel, then you're doing good. And nuclear is one of these ways.
Sadly, [nuclear energy is] like Bitcoin at this point. It has too much baggage, too much bad media around it. And nobody wants to use nuclear even though it's a solved problem… So it's one of those things like – why can’t I just buy a nuclear reactor for my household instead of depending on the grid? Or, a nuclear reactor for my community for that matter and be dependent on that instead of the national power grid? So yeah, regulation, regulation, regulation.”
I'm curious to hear from your point of view: how is Bitcoin adoption going in South Africa?
Kgothatso Ngako: “Oh, quite good. I feel like it could be better. But let me say compared to other places it's quite good. Pretty much almost everyone has heard about Bitcoin. I even walk around with a Bitcoin t-shirt in the weirdest places and get asked about Bitcoin…
It's been great. Even with me and the project that I'm doing, Machankura, is getting people onboarded, telling people about it. I don't have to do too much. They just see ‘oh, this is Bitcoin, finally’ and life goes on.”
What is it about Bitcoin that makes them want to get their hands on it?
Kgothatso Ngako: “So, I think the better question is, ‘what is it about fiat that makes people look for alternatives?’
Bitcoin is just one of those things that people can identify as a good alternative to fiat. Because in a country like South Africa, where there's so much dysfunction, you have to keep asking yourself: ‘Yo, is our money safe?’ We have so many different issues.
We also have like one cash heist a day. So there's a cash heist every day of the year in South Africa. The machines that deliver cash into ATMs get hijacked and bombed. That cash goes wherever it goes. It’s a whole economy of its own. So I guess people are then asking themselves like what is the alternative besides the Rand?
But also besides that, every day you go to the grocery store, you see the prices are more expensive than the last time you went to the grocery store. You have to ask yourself: ‘Yo, I'm not gonna get a raise for the next however many months, so how am I gonna make ends meet?’ They need to do something with this money. So, people keep looking for other ways to stretch their Rand and bitcoin is just one of them.”
I don't want to explain Machankura so I'm going to ask you – do you mind explaining Machankura in the easiest, non-technical way possible for non-techies like myself?
Kgothatso Ngako: “Okay, so I think the explanation is that Machankura is a way for people without internet-connected devices to send and receive bitcoin. And primarily does so by being a USSD service.
It's basically like SMS, but live SMS. So there's a session and the user sends messages back and forth between themselves and the service. And then they get the ability to send and receive bitcoin. And that's basically the grand level explanation of it…
Unlike your SMS which ends up being in your SMS app and you can see the history; with USSD as soon as you stop texting, it disappears. So it doesn't stay on your phone or anything like that.”
What’s the big dream [with Machankura]?
Kgothatso Ngako:“Let me see. Basically millions and millions of users and a lot of usage. People living on a bitcoin standard. All economic transactions being bitcoin transactions, lightning transactions. All these other things. Lightning services.
Weird, weird things like kids learning about Bitcoin and starting a Bitcoin business or starting a business that accepts bitcoin. Whatever that is, whatever that may be. That is the future I see. Some call it hyperbitcoinization. And yeah, that is where I'd like things to go.”
Listen to the full episode to learn more about:
Machankura and what it would take for Kgothatso to expand to Latin America.
Why he views the existing financial system like an arcade game that only a few can win.
Why some businesses fail and others don’t within the fiat system.
Why people become complacent with their jobs and money.
And how a lack of net neutrality prevents people fair access to commerce and finance.
You’ll even listen to him read a poem that summarizes his feelings about the world in which we all live. It’s hauntingly beautiful.
Listen to the conversation on Spotify or Fountain.
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