Propy, a blockchain-verified platform for selling houses, raises funding from Tim Draper

For several years, blockchain technology has been touted as a way to verify the sale of property. Any kind of property. And so entrepreneurs busily began the process of trying to create a startup that could complete a property deal on the blockchain.

One that stood out from the start was Propy, started by Natalia Karayaneva, an experienced, real-world property developer who had subsequently joined the blockchain world. Propy’s other co-founder is Denitza Tyufekchieva (pictured). 

Propy has now raised an undisclosed funding round from venture capitalist investor Tim Draper, best known for his early investments into Tesla, Skype, Twitter, Coindesk and Robinhood. TechCrunch understands this is part of a wider, ongoing fundraise. 

Propy’s platform uses blockchain technology to, it says, simplify the home-purchasing experience and eliminate fraudulent transactions. The idea is to close a traditional real estate deal entirely online. Thus, the offer, signed purchase agreements with DocuSign, secure wire payments and title deeds are all taken care of. Propy claims its platforms saves 10 hours of paperwork, per transaction.

“My vision for Propy is to bring self-driving real estate transactions to the world, with all of the logistics seamlessly executed on the back-end,” Karayaneva said in a statement. “Our platform offers a terminal to observe transactions in real-time, making the process transparent for real estate executives, title companies, homebuilders, buyers, and REITs. With this new investment we are excited to bring much-needed change to the industry, satisfy consumers and empower real estate professionals all over the world.”

But this is not some out-there, wacky crypto-play. Most of the transactions are done in dollars on Propy, meaning it could be used by mainstream users from day one, as it’s able to process wire transfers via integration with a money transmitter connected to 70 banks.

Speaking to TechCrunch, Karayaneva added: “We do not replace lawyers, but rather help them, closing attorney’s share documents with consumers and agents via Propy. With DocuSign integrated, they can sign the documents on Propy and all parties get notified. In the U.S., agents have ready forms in Propy to fill out and they don’t need lawyers in a transaction at all.”

Crucially, Propy has an enterprise play going on here as well. Its platform can provide the back-office system to real estate enterprises with real-time transaction reports and automated compliance.

Draper said: “Propy has the potential to transform real estate, making transactions and titles simpler, more secure, and less expensive through innovative use of blockchain technology. [It] eliminates fraud and makes the closing process more secure, effective and streamlined.”

According to one survey, almost one-fifth of millennials have now thought about buying a home because of the lock-downs induced by the COVID-19 pandemic, meaning that many will be looking for an easy way to transact, especially if it has the ease of use Propy has. 

Propy has some fellow-travelers in the blockchain prop-tech space. ShelterZoom is a Blockchain platform used for virtual and remote collaboration with offices and clients, while StreetWire is a Blockchain-based data service for the real estate industry.

Coinbase UX teardown: 5 fails and how to fix them

Digital currency exchange Coinbase has probably done more than most to push cryptocurrencies closer to the mainstream, earning an $8 billion valuation by private investors along the way. The company is reportedly eyeing a public listing next year, and is inarguably doing a lot of things right. However, that doesn’t mean its product experience is perfect. In fact, far from it.

In our latest UX teardown, with the help of Built for Mars founder and UX expert Peter Ramsey, we highlight some of Coinbase’s biggest user experience failings and offer ways to fix them. Many of these lessons can be applied to other existing digital products or ones you are currently building, including the need to avoid the “Get Started” trap, the importance of providing feedback, why familiarity often wins and other principles.

The ‘Get Started’ trap

Only use CTAs like “get started” or “learn more” if you’re actually teaching users something.

The fail: Coinbase doesn’t actually have any onboarding — but it looks like it does. It has a very prominent “get started” CTA, which actually just puts bitcoins in your basket. This isn’t helping you get started, it’s nothing more than an onboarding Trojan horse.

The fix: It’s simple: Don’t lie in your CTAs. You wouldn’t have “Email Support” as a CTA, and then just show the user a bunch of FAQs.

Steve O’Hear: This feels like another classic “bait and switch” and reeks of dark pattern design. However, what if it actually works to get users over the line and purchase their first bitcoin? Growth hackers, rejoice, no?

Peter Ramsey: You’re absolutely right, this may convert better. From a business point of view, this could be a brilliant little growth hack. However, something converting well doesn’t mean it was a good experience for the user. Look at clickbait-y journalism — it gets more eyeballs, but people aren’t generally happy with what they read.

I’m convinced that in the long term having a great product will perform better than frustrating short-term growth hacks.

Feedback architecture

As a general rule of thumb, all “states” — e.g., success/failure of an action — need to provide feedback to the user.

The fail: After adding a card, you click “Add Card,” and … it takes you back to the homepage. There’s no notice if it was successful or not. The user has no awareness if the action they were trying to do failed and they need to do it again. This is a real problem with digital products: All feedback needs to be thought of and built.

The fix: During the design phase, consider statuses and what the user will want feedback on. For example, if they’ve just added an item to their “wishlist,” how will you show them that the action was successful?

Casa pivots to provide self-custody services to secure bitcoin

Casa, a Colorado-based provider of bitcoin security services, is launching a managed service allowing customers to buy and hold their own bitcoin, rather than using an external custodian like Coinbase.

“With self-custody using Casa it’s impossible to be hacked and nearly impossible to have your bitcoin stolen,” wrote chief executive Nick Neuman in an email. “Leaving bitcoin on an exchange (e.g. Coinbase or many others) opens it up to theft; there is a long history of bitcoin theft and hacks from exchanges.”

Just last year, the major cryptocurrency exchange, Binance, was hacked and thieves made off with bitcoin that was worth $40 million at the time.

Before the upgrade with the new product offering, bitcoin traders had to buy their bitcoin at an exchange and then move their bitcoin off of the exchange to increase security. They can now be secure by default using Casa, according to Neuman.

Bitcoin can now be purchase through Casa and deposited directly into a user’s wallet on the service where they control the funds. Casa never has custody of the user’s bitcoin at any point in the process, which the company said eliminates the risk of using an exchange.

“With the dollar declining in value and a new era of potential inflation on the horizon, consumers are naturally looking for a safe asset class that’s outside the turbulence of the existing financial system,” said Neuman in a statement. “Traditionally, if investors wanted the security and control of Bitcoin self-custody, they had to jump through multiple hoops to register with an exchange, deposit funds for trading, and then move bitcoin to their wallet. As new users begin their Bitcoin journey, they have a much simpler and faster option for buying and securing their first bitcoin with Casa.”

Bitcoin bulls are running, as prices spike above $11K

The bitcoin bulls are back in town.

The price of bitcoin surged today by $1,268.19, reaching a six-month high of $11,203.90, or a one-day gain of 12.73%. It’s another indication of the resurgence of both investor interest in the technology and renewed confidence in its long-term prospects after a rough year of regulatory scrutiny and declining value in the major cryptocurrencies.

For cryptocurrency investors like Alyse Killeen, an advisor to Mantis VC (the investment firm launched by the celebrity music duo The Chainsmokers), the climb in Bitcoin prices reflects the increased stability of the infrastructure that undergirds Bitcoin specifically, and distributed ledger technologies more broadly. 

“Bitcoin has much more intrinsic value today than it did a year ago just from an infrastructure perspective,” Killeen wrote in a direct message. “[The] Lightning network is working, sidechains are working. And so you can do more with bitcoin today than you could last year.”

The Lightning network is a second-layer technology for bitcoin that scales the blockchain’s ability to conduct transactions and it’s increasing people’s ability to actually use the network.

It’s more than just increasing capacity driving the surge in investor interest and prices, Killeen wrote. There’s also the decreased supply of available bitcoin — a function of the halving of coins in circulation which happened earlier this year.

Moreover, financial institutions are now holding cryptocurrencies — giving investors more confidence in the security and fungibility of the assets, Killeen wrote.

Some blockchain experts, like Willy Woo, who is an analyst now working at Lvl to launch Bitcoin banking services even called the timing for the most recent bull run.

Killeen also expected the markets to rise in the third quarter or early fourth quarter thanks to the increasing infrastructure to support transactions and activity on the blockchain, the increasing amount of bitcoin in circulation, and a response to the halving of currency in circulation.

“What’s happening now is that larger institutions are offering purchase facilitation and custody (e.g. Fidelity),” Killeen wrote. “This is bullish for Bitcoin AND self-custody. With ‘real banks’ holding bitcoin for their customers, the average person will view bitcoin more like money, and [the] differentiation of being your own bank becomes even more clear.”

Singapore-based options trading platform Sparrow raises $3.5 million Series A

Sparrow Exchange, a Bitcoin and Ethereum options trading platform based in Singapore, announced today it has raised $3.5 million in Series A funding.

The round was led by HDR Group, the owner of cryptocurrency exchange BitMEX, with participation from Signum Capital, Du Capital and FinLab EOS VC.

The funding will be used to develop Sparrow’s platform and launch new products and services. Earlier this month, for example, it introduced an iOS-optimized mobile interface, and has other releases coming soon. Since launching a year ago, Sparrow has seen over $150 million in options trading volume.

In a press statement, FinLab EOS VC Fund managing director Stefan Schuetze said, “We are excited to invest in Sparrow, which is developing the next generation of financial products by leveraging EOSIO for their on-chain settlement layer.”

Despite the pandemic, the company says its seen an increase in volume over the past few months, as Bitcoin trading reached record highs in several countries, after an initial sell-off in March.

Crypto Startup School: How to scale companies using crypto

Editor’s note: Andreessen Horowitz’s Crypto Startup School brought together 45 participants from around the U.S. and overseas in a seven-week course to learn how to build crypto companies. Andreessen Horowitz is partnering with TechCrunch to release the online version of the course over the next few weeks. 

In week two of a16z’s Crypto Startup School, three company-builders provide real-world advice on using the qualities of crypto to create new business models and networks.

Coinbase founder and CEO Brian Armstrong walks us through “Setting Up and Scaling a Crypto Company,” explaining how crypto can help startups raise money, acquire customers and build a global profile. The issuing of tokens, for example, can align the incentives of early users and reinforce network effects, helping solve the “cold-start” problem that can derail many startups.

Armstrong also outlines the disadvantages of crypto that entrepreneurs must watch out for, including regulatory uncertainty. On balance, he thinks crypto is where the internet was in the early days.

“In five or 10 years, pretty much every startup that gets created, it’s going to use the internet, it’s going to use AI and it’s also going to use some form of cryptocurrency somewhere in that product.”

In the next lecture, Balaji Srinivasan, an angel investor and co-founder of multiple companies, including Earn.com and Counsyl, gives an overview of “Applications: Today & 2025.”

Srinivasan starts off by tracing the history of crypto from Bitcoin and Ethereum to the present. He highlights the crypto applications that have already gotten traction — infrastructure providers such as exchanges, wallets and miners; decentralized finance (DeFi) apps; and stablecoins that eliminate the volatility of early cryptocurrencies — and looks ahead to the ones that are likely to emerge in the next five years. These include personal tokenization, new financial instruments, decentralized autonomous organizations and gaming.

Finally, Forte co-founder and CEO Josh Williams does a deep dive on “Opportunities for Crypto and Gaming.” Williams explains that blockchain technology could have an even bigger impact on gaming than the internet because it’s not just connecting people, but potentially changing business models by aligning the incentives of developers and players. It can do this by allowing players to truly own the assets in games and verify their provenance, and by enabling developers to code rich incentive systems and rewards into games.

By incorporating these mechanisms, Williams believes, an already exploding gaming industry will grow and create multi-billion-dollar marketplaces within games that will truly benefit players and developers.

Former Coinbase exec is now down with OCC (the Office of the Comptroller of the Currency)

Former Coinbase chief legal officer Brian Brooks has been tapped as the chief operating officer and first deputy comptroller of the Office of the Comptroller of the Currency, beginning April 1, 2020.

In the role, Brooks will help the OCC in its mission of chartering, regulating and supervising national banks and federal savings associations, along with federal branches and agencies of foreign banks.

Specifically, the chief operating officer is involved with oversight of banking supervision policy, large bank supervision, midsize and community bank supervision, the office of innovation, supervision system and analytical support and systemic risk identification support and specialty supervision.

Nowhere in that word-salad does it mention bitcoin, but it’s likely that cryptocurrencies will be one area where Brooks will spend at least some of his time, given his previous job and areas of expertise.

“Brian Brooks is a strong leader with extensive experience in the financial services sector,” said Treasury Secretary Steven T. Mnuchin, in a statement. “I look forward to working with him to ensure the stability of our financial system and its ability to foster greater economic growth for the benefit of all Americans.”

Brooks served as the chief legal officer for Coinbase since September 2018, and previously served as executive vice president, general counsel and corporate secretary of Fannie Mae.

Into Africa: tech leaders weigh in on Jack Dorsey’s planned move to the continent

It’s not every day that the CEO of a large Silicon Valley tech company decides to relocate to a different part of the world in order to learn more about it — particularly a frequently maligned and often overlooked by big-business part.

But Jack Dorsey, the American tech entrepreneur who co-founded and leads not one, but two publicly listed companies (Twitter and Square) is not your typical CEO. Dressed down, bearded, often wearing a wooly hat and speaking in a slow, quiet voice, you might even call Dorsey the anti-CEO. He eschews many of the stereotypical trappings of the executive life and mannerisms in favor of taking silent retreats and traveling to countries like Burma.

In November 2019, Dorsey’s itchy feet took him to Africa, where he visited Nigeria, Ghana, South Africa and Ethiopia on a listening tour. He had meetings at incubators in Lagos and Addis Ababa; and talked to a number of African tech-leaders, including Tayo Oviosu, the CEO of Nigerian payments startup Paga; and Yeli Bademosi, the director of Binance Labs.

And before he departed back for the US, he did something more: he announced that he would return in 2020 to live somewhere on the continent for up to six months.

“Africa will define the future (especially the bitcoin one!). Not sure where yet, but I’ll be living here for 3-6 months mid 2020,” he Tweeted from Ethiopia.

Why Africa?

And where? And when? If you have ever spoken to Dorsey — or more likely read an interview with him — you’ll note that the he can be somewhat oblique. It’s rare that he gives straight answers to straight questions, even if he always responds with something.

So when spokespeople from both Twitter and Square declined to comment on what his plans will be and if they will relate to those two companies, it might be just as likely that they don’t want to disclose anything as they don’t actually know.

But one thing is clear: Africa’s 54 countries and 1.2 billion people is one of the last blue oceans for global tech growth (one that not only Dorsey has identified).

To that end, TechCrunch talked to several people from Africa’s tech world to get their thoughts on what he could do, and what bears remembering as the world follows Dorsey’s spotlight.

The state of the market

When you look at year-over-year expansion in VC investment in the region, startup formation and incubators, the African continent is one of the fastest-growing technology markets in the world — even if today, by monetary value, it’s tiny by Shenzhen or Silicon Valley standards.

Three of the top destination countries for startup investment — Kenya, Nigeria and South Africa — collectively surpassed $1 billion in investment for the first time in 2018, with fintech businesses currently receiving the bulk of the capital and dealflow, according to Partech and WeeTracker stats.

By most accounts, Dorsey’s first foot forward last November was to make himself a student of the continent’s innovation scene — but specifically as it relates to fintech (and by association, his affiliation with Square and latterly Bitcoin).

“It was more them listening than anything else. Not just Jack, but the other senior members of his team,” CcHub’s CEO Bosun Tijani said of Dorsey’s meetings at the incubator.

After acquiring Kenya’s iHub, CcHub is the largest incubator in Africa. Other members of Dorsey’s team who joined him there included Twitter CTO Parag Agrawal and Product Lead Kayvon Beykpour.

“[Dorsey] said the main reason [he was in Ethiopia and Africa] was to listen and to learn what’s going on in the region,” said Ice Addis’ Markos Lemma .

Jack Dorsey CcHub Bosun Tijani Damilola Teidi

Dorsey with CcHub’s Bosun Tijani and Damilola Teidi

Over recent years, Nigeria has become Africa’s leader in startup formation, VC, and the entry of big tech players, such as Facebook — which opened an incubator in Lagos in 2018.

Since 2014, the country of 200 million has held the dual distinction as Africa’s most populous nation and largest economy. This makes it a compelling market for fintech and social media apps.

Twitter in Africa, according to sources, was less of a topic during Jack Dorsey’s meetings with founders and techies. This makes some sense. The service has lower penetration in the region estimated at 7.46%, higher than Instagram but lower than Pinterest — and that essentially means that the business opportunities there are fewer, since the majority of Twitter’s revenues comes from advertising.

“The only concrete thing in all this communication…is he seems to be interested in Bitcoin,” said Tijani.

Markos Lemma had the same takeaway after talking with Dorsey. “I think he’s specifically interested in Bitcoin,” he said.

Crypto

Dorsey’s crypto focus in Africa isn’t such a surprise, given his bullish stance on Bitcoin and blockchain-based technology.

In October, he invested $10 million in CoinList, a startup that facilities and manages token sales. And rather than create its own cryptocurrency, like Facebook’s Libra experiment, Square is using Bitcoin as the basis for its digital-currency strategy. The company added Bitcoin trades to CashApp, its P2P payment and investment product, in 2018 and its Square Crypto effort announced this year aims to “support and promote Bitcoin” through open source development.

A recent interview with Australia’s Financial Review could offer further insight into Dorsey’s crypto Africa vision.

“I think the internet will have a native currency and anything we can do to make that happen we’ll do,” he said in reference to Square’s moves.

“In the long term it will help us be more and more like an internet company where we can launch a product…and the whole world can use it, instead of having to go from market to market, to bank to bank to bank and from regulatory body to regulatory body.”

Square Bitcoin

What Dorsey is describing, in part, is the primary use case for cryptocurrency in Africa — where there remain all kinds of inefficiencies around moving money. The continent’s people pay the highest remittance costs in the world largely due to fragmented (and often inadequate) financial infrastructure and expensive cross-border transaction costs.

By several estimates, Africa is also home to the largest share of the world’s banked and underbanked consumer and SME populations.

Roughly 66% of Sub-Saharan Africa’s 1 billion people don’t have a bank account, according to World Bank data.

There are hundreds of payments startups across the region looking to move that needle by getting these people on the financial map — and more opportunistically, getting them to use their products.

To be fair, the adoption of digital finance products, such as M-Pesa in Kenya, have succeeded in reaching tens of millions.

A characteristic of successful African fintech products, however, is that their use has been geographically segregated, with few apps able to scale widely across borders. Some of that relates to vastly different regulatory structures and the difficulty in shaping product-market-fit from country to country.

Cryptocurrency’s potential to bypass inefficient or deficient finance structures has been getting attention in Africa.

The last two years saw several ICOs on the continent. One of the largest coin offerings ($7 million) was in 2018 by SureRemit — a startup that launched a crypto-token aimed at Africa’s incoming and intra-country remittance markets.

SureRemit’s CEO, Adeoye Ojo, sees the relevance and timing of Jack Dorsey’s interest in cryptocurrencies on the continent.

“Right now a lot of people and governments in Africa are aware of blockchain and cryptocurrencies, compared to two years ago, and asking questions about how this can be leveraged; what kind of products can we build around this,” Ojo told TechCrunch.

Bitcoin, according to Ojo, is finding utility on the continent. “It has helped people with value transfer significantly. A lot of businesses trying to make payments outside Nigeria…frustrated with access to forex or access to USD, are leveraging Bitcoin to make payments directly to vendors or suppliers in Asia and Europe,” he said.

On business motivations for Dorsey’s move to Africa, “I think he is definitely looking at the opportunity to get more people to adopt payments on Bitcoin, buying Bitcoin with Square here,” Ojo said — based on the collective information he’s followed re Dorsey’s crypto motives and what emerged from Jack’s recent trip. 

Square has yet to launch any services in Africa, but if there is a business purpose to Dorsey’s residency, one could be considering how and if the company has scope for building out services in the region, specifically one based around cryptocurrency.

SureRemit CEO Adeoye Ojo believes Dorsey could also look to establish a unique African Bitcoin exchange.

But Ojo underscored the specific hurdles to cryptocurrency adoption on the continent. The first is regulation. Regulatory reviews on digital-currency use are ongoing in major economies Nigeria and Kenya. South Africa’s Central Bank is considering rules that would limit use of cryptocurrencies for foreign transfers.

“Even if the application for crypto works here, if the regulations that come forward don’t support it, it won’t happen,” said Ojo.

As with other parts of the world, Africa also faces a trust issue on digital currency adoption, he added, due to Bitcoin’s implication in several scams — most notably to defraud millions of Nigerians in the Mavrodi Mundial Moneybox (MMM) ponzi scheme.

“For many Nigerians, their first introduction to Bitcoin was this MMM scam…People have been adopting  mobile money in Africa, but it’s gonna take a bit of market education for them to understand using Bitcoin isn’t just some scam,” he said.

Advice for Dorsey

On where Dorsey should spend time on his return, Cellulant CEO Ken Njoroge, thinks Kenya is a must, given its lead as one of the top countries in the world for mobile-money adoption.

“Coming to live in the ecosystem is a good thing…it’s the best way to really understand…and get the nuances of business in Africa,” he said.

Cellulant CEO Ken Njoroge

Njoroge, whose Nairobi-based fintech company processes payments in 35 African countries, also suggested Dorsey understand any tech play in Africa requires a long-game commitment, given the infrastructure challenges in the ecosystem compared to others.

On that topic, Ice Addis co-founder Markos Lemma suggested Dorsey provide founders advice on operating around and influencing tech-regulation. “He’s had a lot experience navigating the U.S. and other markets with Twitter and Square. I don’t know any entrepreneur in Ethiopia or other African markets who has that experience navigating and negotiating regulations,” he said.

For all the likelihood Dorsey’s pending move could be motivated by Square and Bitcoin, three of the founders interviewed by TechCrunch — Bosun Tijani, Ken Njoroge, and Markos Lemma — underscored the rise of Twitter in Africa’s civic and political spheres.

Square doesn’t operate in Africa but Twitter is the fourth most used social media app on the continent and sells ads in Africa through partner, Ad Dynamo, a Twitter spokesperson confirmed.

Social Media Stats 2019 Africa“Twitter is quite powerful in Nigeria,” CcHub’s CEO said of the social media platform in the country, which has been plagued by theft of state resources in the hundreds of billions.

“It’s not just a social media platform for Nigeria. It’s changing the dynamics between people with power and those that they’re meant to serve,” Tijani explained.

Twitter (along with Facebook) has also been implicated in Africa’s first (notable) social media political interference campaigns.

“There’s a lot of hate speech and misinformation that’s been showing up on social media,” said Ice Addis’ Markos Lemma. “With [Ethiopia’s] 2020 elections on the horizon, I think it would be important for him to address how Twitter can mitigate that risk.”

Dorsey has faced flak from some analysts and Twitter board members for his planned move outside the U.S., given risks associated with Twitter and the upcoming American election.

So Dorsey’s 2020 Africa move could certainly uncover opportunities for cryptocurrency and Square on the continent.

It could also become a reminder that wherever he travels so too do the complications of his social media company back home.

Into Africa: tech leaders weigh in on Jack Dorsey’s planned move to the continent

It’s not every day that the CEO of a large Silicon Valley tech company decides to relocate to a different part of the world in order to learn more about it — particularly a frequently maligned and often overlooked by big-business part.

But Jack Dorsey, the American tech entrepreneur who co-founded and leads not one, but two publicly listed companies (Twitter and Square) is not your typical CEO. Dressed down, bearded, often wearing a wooly hat and speaking in a slow, quiet voice, you might even call Dorsey the anti-CEO. He eschews many of the stereotypical trappings of the executive life and mannerisms in favor of taking silent retreats and traveling to countries like Burma.

In November 2019, Dorsey’s itchy feet took him to Africa, where he visited Nigeria, Ghana, South Africa and Ethiopia on a listening tour. He had meetings at incubators in Lagos and Addis Ababa; and talked to a number of African tech-leaders, including Tayo Oviosu, the CEO of Nigerian payments startup Paga; and Yeli Bademosi, the director of Binance Labs.

And before he departed back for the US, he did something more: he announced that he would return in 2020 to live somewhere on the continent for up to six months.

“Africa will define the future (especially the bitcoin one!). Not sure where yet, but I’ll be living here for 3-6 months mid 2020,” he Tweeted from Ethiopia.

Why Africa?

And where? And when? If you have ever spoken to Dorsey — or more likely read an interview with him — you’ll note that the he can be somewhat oblique. It’s rare that he gives straight answers to straight questions, even if he always responds with something.

So when spokespeople from both Twitter and Square declined to comment on what his plans will be and if they will relate to those two companies, it might be just as likely that they don’t want to disclose anything as they don’t actually know.

But one thing is clear: Africa’s 54 countries and 1.2 billion people is one of the last blue oceans for global tech growth (one that not only Dorsey has identified).

To that end, TechCrunch talked to several people from Africa’s tech world to get their thoughts on what he could do, and what bears remembering as the world follows Dorsey’s spotlight.

The state of the market

When you look at year-over-year expansion in VC investment in the region, startup formation and incubators, the African continent is one of the fastest-growing technology markets in the world — even if today, by monetary value, it’s tiny by Shenzhen or Silicon Valley standards.

Three of the top destination countries for startup investment — Kenya, Nigeria and South Africa — collectively surpassed $1 billion in investment for the first time in 2018, with fintech businesses currently receiving the bulk of the capital and dealflow, according to Partech and WeeTracker stats.

By most accounts, Dorsey’s first foot forward last November was to make himself a student of the continent’s innovation scene — but specifically as it relates to fintech (and by association, his affiliation with Square and latterly Bitcoin).

“It was more them listening than anything else. Not just Jack, but the other senior members of his team,” CcHub’s CEO Bosun Tijani said of Dorsey’s meetings at the incubator.

After acquiring Kenya’s iHub, CcHub is the largest incubator in Africa. Other members of Dorsey’s team who joined him there included Twitter CTO Parag Agrawal and Product Lead Kayvon Beykpour.

“[Dorsey] said the main reason [he was in Ethiopia and Africa] was to listen and to learn what’s going on in the region,” said Ice Addis’ Markos Lemma .

Jack Dorsey CcHub Bosun Tijani Damilola Teidi

Dorsey with CcHub’s Bosun Tijani and Damilola Teidi

Over recent years, Nigeria has become Africa’s leader in startup formation, VC, and the entry of big tech players, such as Facebook — which opened an incubator in Lagos in 2018.

Since 2014, the country of 200 million has held the dual distinction as Africa’s most populous nation and largest economy. This makes it a compelling market for fintech and social media apps.

Twitter in Africa, according to sources, was less of a topic during Jack Dorsey’s meetings with founders and techies. This makes some sense. The service has lower penetration in the region estimated at 7.46%, higher than Instagram but lower than Pinterest — and that essentially means that the business opportunities there are fewer, since the majority of Twitter’s revenues comes from advertising.

“The only concrete thing in all this communication…is he seems to be interested in Bitcoin,” said Tijani.

Markos Lemma had the same takeaway after talking with Dorsey. “I think he’s specifically interested in Bitcoin,” he said.

Crypto

Dorsey’s crypto focus in Africa isn’t such a surprise, given his bullish stance on Bitcoin and blockchain-based technology.

In October, he invested $10 million in CoinList, a startup that facilities and manages token sales. And rather than create its own cryptocurrency, like Facebook’s Libra experiment, Square is using Bitcoin as the basis for its digital-currency strategy. The company added Bitcoin trades to CashApp, its P2P payment and investment product, in 2018 and its Square Crypto effort announced this year aims to “support and promote Bitcoin” through open source development.

A recent interview with Australia’s Financial Review could offer further insight into Dorsey’s crypto Africa vision.

“I think the internet will have a native currency and anything we can do to make that happen we’ll do,” he said in reference to Square’s moves.

“In the long term it will help us be more and more like an internet company where we can launch a product…and the whole world can use it, instead of having to go from market to market, to bank to bank to bank and from regulatory body to regulatory body.”

Square Bitcoin

What Dorsey is describing, in part, is the primary use case for cryptocurrency in Africa — where there remain all kinds of inefficiencies around moving money. The continent’s people pay the highest remittance costs in the world largely due to fragmented (and often inadequate) financial infrastructure and expensive cross-border transaction costs.

By several estimates, Africa is also home to the largest share of the world’s banked and underbanked consumer and SME populations.

Roughly 66% of Sub-Saharan Africa’s 1 billion people don’t have a bank account, according to World Bank data.

There are hundreds of payments startups across the region looking to move that needle by getting these people on the financial map — and more opportunistically, getting them to use their products.

To be fair, the adoption of digital finance products, such as M-Pesa in Kenya, have succeeded in reaching tens of millions.

A characteristic of successful African fintech products, however, is that their use has been geographically segregated, with few apps able to scale widely across borders. Some of that relates to vastly different regulatory structures and the difficulty in shaping product-market-fit from country to country.

Cryptocurrency’s potential to bypass inefficient or deficient finance structures has been getting attention in Africa.

The last two years saw several ICOs on the continent. One of the largest coin offerings ($7 million) was in 2018 by SureRemit — a startup that launched a crypto-token aimed at Africa’s incoming and intra-country remittance markets.

SureRemit’s CEO, Adeoye Ojo, sees the relevance and timing of Jack Dorsey’s interest in cryptocurrencies on the continent.

“Right now a lot of people and governments in Africa are aware of blockchain and cryptocurrencies, compared to two years ago, and asking questions about how this can be leveraged; what kind of products can we build around this,” Ojo told TechCrunch.

Bitcoin, according to Ojo, is finding utility on the continent. “It has helped people with value transfer significantly. A lot of businesses trying to make payments outside Nigeria…frustrated with access to forex or access to USD, are leveraging Bitcoin to make payments directly to vendors or suppliers in Asia and Europe,” he said.

On business motivations for Dorsey’s move to Africa, “I think he is definitely looking at the opportunity to get more people to adopt payments on Bitcoin, buying Bitcoin with Square here,” Ojo said — based on the collective information he’s followed re Dorsey’s crypto motives and what emerged from Jack’s recent trip. 

Square has yet to launch any services in Africa, but if there is a business purpose to Dorsey’s residency, one could be considering how and if the company has scope for building out services in the region, specifically one based around cryptocurrency.

SureRemit CEO Adeoye Ojo believes Dorsey could also look to establish a unique African Bitcoin exchange.

But Ojo underscored the specific hurdles to cryptocurrency adoption on the continent. The first is regulation. Regulatory reviews on digital-currency use are ongoing in major economies Nigeria and Kenya. South Africa’s Central Bank is considering rules that would limit use of cryptocurrencies for foreign transfers.

“Even if the application for crypto works here, if the regulations that come forward don’t support it, it won’t happen,” said Ojo.

As with other parts of the world, Africa also faces a trust issue on digital currency adoption, he added, due to Bitcoin’s implication in several scams — most notably to defraud millions of Nigerians in the Mavrodi Mundial Moneybox (MMM) ponzi scheme.

“For many Nigerians, their first introduction to Bitcoin was this MMM scam…People have been adopting  mobile money in Africa, but it’s gonna take a bit of market education for them to understand using Bitcoin isn’t just some scam,” he said.

Advice for Dorsey

On where Dorsey should spend time on his return, Cellulant CEO Ken Njoroge, thinks Kenya is a must, given its lead as one of the top countries in the world for mobile-money adoption.

“Coming to live in the ecosystem is a good thing…it’s the best way to really understand…and get the nuances of business in Africa,” he said.

Cellulant CEO Ken Njoroge

Njoroge, whose Nairobi-based fintech company processes payments in 35 African countries, also suggested Dorsey understand any tech play in Africa requires a long-game commitment, given the infrastructure challenges in the ecosystem compared to others.

On that topic, Ice Addis co-founder Markos Lemma suggested Dorsey provide founders advice on operating around and influencing tech-regulation. “He’s had a lot experience navigating the U.S. and other markets with Twitter and Square. I don’t know any entrepreneur in Ethiopia or other African markets who has that experience navigating and negotiating regulations,” he said.

For all the likelihood Dorsey’s pending move could be motivated by Square and Bitcoin, three of the founders interviewed by TechCrunch — Bosun Tijani, Ken Njoroge, and Markos Lemma — underscored the rise of Twitter in Africa’s civic and political spheres.

Square doesn’t operate in Africa but Twitter is the fourth most used social media app on the continent and sells ads in Africa through partner, Ad Dynamo, a Twitter spokesperson confirmed.

Social Media Stats 2019 Africa“Twitter is quite powerful in Nigeria,” CcHub’s CEO said of the social media platform in the country, which has been plagued by theft of state resources in the hundreds of billions.

“It’s not just a social media platform for Nigeria. It’s changing the dynamics between people with power and those that they’re meant to serve,” Tijani explained.

Twitter (along with Facebook) has also been implicated in Africa’s first (notable) social media political interference campaigns.

“There’s a lot of hate speech and misinformation that’s been showing up on social media,” said Ice Addis’ Markos Lemma. “With [Ethiopia’s] 2020 elections on the horizon, I think it would be important for him to address how Twitter can mitigate that risk.”

Dorsey has faced flak from some analysts and Twitter board members for his planned move outside the U.S., given risks associated with Twitter and the upcoming American election.

So Dorsey’s 2020 Africa move could certainly uncover opportunities for cryptocurrency and Square on the continent.

It could also become a reminder that wherever he travels so too do the complications of his social media company back home.

As 2019 closes, a look back at what happened to the altcoin boom

Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.

Today we’re peeking at what’s gone on in the world of altcoins recently, the other cryptocurrencies aside from bitcoin.

As 2016 came to a close, altcoins like ether and XRP saw their value soar. Toward the end of 2016 through early 2018, bitcoin’s relative share of the aggregate value of all cryptocurrencies fell to about a third.

Since then there’s been a reversal. Bitcoin is not only back over the 50% market share mark, it has effectively doubled its portion of crypto worth over the last two years.

What happened? Why altcoins have struggled isn’t something we can answer with a single data point or chart. But we can highlight a few reasons that help explain what happened. We’ll start with a look at the data and then we’ll highlight three ideas concerning what changed that pushed altcoins down, and bitcoin back up.

Over the past few weeks we’ve spent most of our time digging into IPOs, larger startups, stocks and revenue thresholds. Today we’re expanding our horizons a bit, looking at a market that sits somewhere to the side of our usual public-private divide. We’re having fun!

First words

Let’s start with a few caveats to save tweets.

We all know that comparing the value of a cryptocurrency or token isn’t the only way to stack blockchains against one another. We also also know that comparing market caps isn’t a perfect way to examine the market. And, yes, there’s lots of development work that goes on behind the scenes that doesn’t show up in the data we are going to examine.

That said, we’re nearly 11 years into the bitcoin era. We care a bit more today than we did a half-decade ago about what is, versus what might be.

Comparative worth

From the fine folks over at CoinMarketCap, the following set of data maps the relative value of the major cryptos, with smaller coins aggregated into a shared line:

I know it’s the day after a major holiday, so let’s help out. The big orange area is bitcoin. The 2017-2018 era is the period in which altcoins had their heyday. And since mid-2018 you can see bitcoin recapture most of its lost, relative prominence.

Bearing in mind that the value of bitcoin has traded as high as roughly $20,000 in late 2017, and is worth about $7,400 today, the chart does not merely show bitcoin recovering its former value. But it does show how over the last two years bitcoin’s share of the value of traded cryptos has doubled. Here are the key data points:

  • December 15, 2016, bitcoin share of total crypto market cap: ~86%
  • December 15, 2017, bitcoin share of total crypto market cap: ~55%
  • January 15, 2018, bitcoin share of total crypto market cap: ~33%
  • December 15, 2018, bitcoin share of total crypto market cap: ~55%
  • December 15, 2019, bitcoin share of total crypto market cap: ~66%

More simply, bitcoin’s share of the value of all cryptos held steady above 80% for a very long time. Then in early 2017 that same share began to fall. It continued to slip into the early days of 2018. Since then it recovered first to its December 2017 levels. And this year the relative value of bitcoin rose again, bringing it to twice its lowest ratings.

Why did that happen? Here are three reasons that form a part of the why.

There and back again

For those of you with pie to eat, here’s our arguments upfront. Bitcoin bounced back due to:

  1. The failure of distributed apps to take off in terms of usage, and spend;
  2. The general nonperformance of ICOs;
  3. A fraud-led flight to quality.