Project Bitcoin Ekasi, the makings of a Bitcoin Beach in South Africa?
The JCC Camp township (JCC Camp) in Mossel Bay, South Africa, sits atop a barren hillside overlooking the Indian Ocean. The informal settlement is packed with homes made from corrugated iron and repurposed materials, humming with the hustle and bustle of people on their daily grind. At the base of the hill, wedged between JCC Camp and the Mossel Bay industrial area, lies Dias Beach, where Bitcoin Ekasi has its beginnings.
In 2010, South African Hermann Vivier and his wife, Jenya, founded The Surfer Kids, a non-profit organisation (NPO) in Mossel Bay that teaches life skills to kids from disadvantaged communities through surfing. A decade later, the programme coaches 40 kids from JCC Camp and employs four coaches from the township.
Hermann has been investing in and learning about Bitcoin since the very early days in 2013, but it was only in 2019, while listening to an interview with Michael Peterson, the founder of Bitcoin Beach in El Zonte, El Salvador, that he realised The Surfer Kids could be a springboard to incorporate cryptocurrency into the JCC community.
Up until then, the NPO had shown some positive results but he believed Bitcoin could help The Surfer Kids make a real impact at ground level, he tells Luno. “Currently, we have 40 kids in the programme but there are thousands of kids in JCC,” Hermann says. “Forty is a drop in the ocean.” He started Bitcoin Ekasi soon after he heard the Peterson interview. The origin of the word Ekasi is steeped in South African history and is an isiZulu and isiXhosa word meaning township used by members of the community to describe their home. The term carries a sense of belonging and community.
The similarities between El Zonte and JCC are obvious. Regional differences aside, among both systemically marginalised communities there is a high proportion of those that live below the poverty line. And both towns are situated next to a beach with some decent waves. It’s clear that the Bitcoin Beach project in El Zonte resonated with Hermann. “It just made sense,” he says.
The societal impact, or promise, of Bitcoin in a circular economy is yet to be fully realised. Feedback from El Zonte, the first Bitcoin economy, has been mixed. Some merchants in El Zonte say it’s given them a chance to invest and save for the long term and provide for their families, while others have simply gone on as before, refusing to accept anything other than hard cash.
Doubt has also been cast over the El Salvadoran President’s decision to make Bitcoin legal tender, with economists pointing out that President Bukele’s Bitcoin ambitions may be a crapshoot to pay off the country’s mounting debts. Technical and other operational glitches have also plagued Chivo, the official Bitcoin wallet in El Salvador, but considering the sheer scale of the experiment, the first of its kind in history, it was never going to go off without a hitch.
Cash vs. Bitcoin
The ultimate question hanging over these projects is what can Bitcoin offer the community that cash and the banking system can’t? Much of the population remains unbanked, with little opportunity or access to financial services. In many communities around the world, the Lightning Network, a layer-2 network built on top of the Bitcoin blockchain, allows people to send remittances across borders at very little cost and almost instantly, as there’s no company in the middle scooping a percentage off each transaction. It’s also an opportunity to save.
And due to the decentralised nature of blockchain technology, there are fewer barriers to financial services. “Now the people earning and using Bitcoin are saving a small percentage of their daily earnings in Bitcoin,” Hermann explains.
Bitcoin’s price volatility is the other major question that still needs answering. “It’s an obvious problem I don’t have the answers to, but if you don’t have a bank account you can’t save at all,” says Hermann.
For the surf coaches who earn their salaries in Bitcoin, volatility isn’t too much of a problem, as they spend a certain amount on groceries on the day they are paid, and then save the rest. Volatility can be a problem for shop owners but in JCC most see it as an investment opportunity. Bitcoin payments make up a small percentage of daily turnover for these shop owners, but volatility may become an issue if it were to increase. “We would eventually have to solve the liquidity problem by providing a way of converting to fiat regularly and seamlessly,” Hermann says.
People on the ground
Luthando Lovemore Ndbambi is a senior coach at The Surfer Kids and the main driver of Bitcoin adoption in JCC. He has been instrumental in educating people about Bitcoin and the technical details around how to transact with the cryptocurrency.
Hermann taught Luthando the fundamentals of Bitcoin and its workings, after which Luthando and other coaches started talking to the JCC community and set about onboarding interested shop owners.
Speaking on the progressive bitcoiner podcast, Luthando says it’s a process of show and tell. “When I’m with shop owners, I show them how to buy food on Bitrefill using Bitcoin. A lot of people think it’s a scam, but I show them that you can buy anything you want with Bitcoin. This is real money.”
In an article highlighting the lessons learned from Bitcoin Beach, Galoy, the software provider and wallet creator for the El Zonte project, stresses the importance of community organisers to the onboarding process. “Having an in-person onboarding team ensures people start off on the right foot. This is especially important in communities where Bitcoin presents the opportunity to transact digitally for the first time,” Galoy says. Herman agrees.“The most powerful thing is to illustrate how it works,” he notes.
“It’s more about the people’s understanding of what Bitcoin is and how it works, and not so much about the technology required to run the project,” says Noor Elhuda El Bawab, director of partnerships at Galoy. “The community in Bitcoin Beach was new to this type of technology and required an app that was customised for day-to-day use, based on keeping their Bitcoin secure and how they interacted with their phones,” she explains. “We wanted to ensure it wasn’t burdensome to use.” The Galoy software is open-source, there for any person or company to use as they wish.
A project in progress
Bitcoin users in JCC have been using the Lightning Network with general Bitcoin and Lightning Network apps downloaded from an app store. “In Afrikaans, our approach would be called a ‘spoeg en plak’ solution,” Hermann says, meaning cobbled together. “But this just shows that you don’t need a team of developers or a bank to run Bitcoin,” he says. “I would like to use a wallet more suited to our needs, but in time that will come.”
The project is still in the early stages, with six people from Surfer Kids spending Bitcoin at five shops. For now, this cobbled together solution works. “It’s possible to keep track of what’s happening, but as the project expands we are going to have to find someone that can help build a wallet like the one they use at Bitcoin Beach,” Hermann says. “That’s likely our biggest challenge in the long run.”
In the foreword to the Galoy article about lessons from Bitcoin Beach, Michael Peterson talks about the unlikeliness of Bitcoin Beach being the setting for the world’s first Bitcoin economy. “Nobody would have imagined that the first true Bitcoin economy would find its genesis in a small rural village in El Salvador,” he writes. Similarly, very few non-South Africans will be able to point out Mossel Bay on a map, and very few South Africans know where JCC Camp township is, but it so happens that it’s currently the sandbox for the first Bitcoin economy in the country.
As Peterson writes, “In retrospect, the outcome [for El Zonte] was obvious: a population that struggles with poverty and lack of financial inclusion was always destined to see the value of Bitcoin before wealthy communities in Singapore or Silicon Valley.”
The promise of technology
Hermann sees Bitcoin Ekasi and Bitcoin Beach, along with other similar projects around the world, as a real-world example of what Bitcoin the technology, aside from Bitcoin the investment, can do. “Bitcoin Ekasi has received considerable attention among the international Bitcoin community within a relatively short space of time, likely because Bitcoiners believe in the promise of open access and decentralisation that the technology holds,” he explains. “And not in a way that is all about speculation, but instead real world application, and in a challenging environment.”
One of these supporters is Bitcoin podcaster and educator Anita Posch, who is visiting Hermann and the team to see what the project is about, but also to deliver donated Trezor Hardware wallets and help with the installation of a Bitcoin Lightning Node. “This will enable Bitcoin Ekasi to use Bitcoin and the Lightning Network in a sovereign way, as it was intended, holding the keys to its own funds and transacting without an intermediary,” Hermann explains.
The next step for Bitcoin Ekasi is to get Bitcoin into the hands of more people. “There are currently five shops accepting Bitcoin but we identified a total of 15,” Hermann says. “Bitcoin gives you this excitement about the future, in the sense that if I save enough, it can mean something.”
Explaining to the progressive bitcoiner his vision of Ekasi five years from now, Luthando sees everyone in the township transacting with Bitcoin. “Everyone is using Bitcoin to buy things at the shop, and everyone is saving Bitcoin,” he says.