How This Entrepreneur Wants To Connect Africa's Economy To The World Using Diamonds
Africa can use a cryptocurrency backed by diamonds on their current infrastructure to improve their access to stable funds.
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If you know anything about the history of diamonds in Africa, you're probably aware of the bad perception it has within the African culture, and its connotations to slavery, suffering, and death.
Entrepreneur Jeremy Dahan, CEO of diamDEXX, aims to shift peoples' perceptions of diamonds away from this and to use diamonds for good to bring Africa back into power by connecting it to the rest of the world.
Africa's growing mobile money sector
Over the past ten years, mobile adoption in West Africa has been increasing rapidly.
While at the start of the decade only 28% of West African citizens had access to a mobile phone, that figure has since shot up to 47% as of last year.
Along with this rise in mobile phone usage has been the rise in mobile money. There are now 13 times more active mobile money agents in West Africa than the total number of bank branches and ATMs.
In the coming years, the popularity of mobile money is expected to increase even more drastically as West Africa's young population continue to get connected. By 2025, GSMA expects that there could be up to an additional 72 million new subscribers added.
However, it isn't all good news. Local currencies in Africa continue to suffer from inflation and bad economic policies.
The question is: how can we solve this?
A cryptocurrency backed by diamonds
DIAM is known as a "stablecoin', which essentially means that it is pegged to a stable asset. In this case, it is pegged to the price of 1 USD.
In order to further protect the currency against the volatility and inflation of the USD, the coin can be exchanged for physical diamonds at any point in time. This means that the DIAM coin can be used as a safe store of value - especially when compared to local currencies.
The wallet is backed by the International Diamond Exchange (IDEX), making it fully transparent. In addition, the wallet is hosted on the high-security platform, Microsoft Azure. All assets are completely certified, audited, and fully backed by powerful algorithms and smart contracts.
IDEX issues a certificate of authenticity for every diamond in the diamDEXX network to ensure that it is compliant with the anti-blood Kimberley Protocol. This was established in 2003 to prevent "blood diamonds' from entering the rough diamond market.
The Kimberley Process website states that the primary purpose of the protocol is to "ensure that diamond purchases were not financing violence by rebel movements and their allies seeking to undermine legitimate governments".
Complying with such a protocol should be vital for all companies that have potential involvement in the trading of diamonds.
How could this connect Africa's economy to the rest of the world?
"If Africa manages to ride the crypto wave on time, then the opportunities are endless. They've already got an infrastructure self-designed to accommodate electronic money; now they just need to embrace decentralisation," says Jeremy Dahan.
Users will be able to purchase diamonds and store them securely. The platform also enables African citizens to carry out secure transactions all over the world, to exchange the currency for Bitcoin and other widely accepted cryptocurrencies.
They can even exchange them to gift cards that African entrepreneurs can use to purchase useful things for their businesses from ecommerce websites such as Amazon.
The platform also features DiamDrop, a manufacturer-to-customer diamond retail program that users can go to exchange their DIAM for the equivalent worth of physical diamonds at a discount.
Right now, both local African currencies and most widely used cryptocurrencies are extremely volatile. Most cryptocurrencies are currently backed by fiat currencies, which are subject to inflation.
The main purpose of the DIAM coin, which unlike the vast majority of cryptocurrencies is backed by a physical asset, is to be a secure store of value.
The future of crypto in Africa looks bright
Over the past few months, cryptocurrencies - particularly Bitcoin - have witnessed a general upward trend. This suggests that, despite the crypto slump that followed the boom back in December 2017, there is lots of hope for the future.
"We want users to learn about crypto using safe, consistent assets with actual use cases," Dahan continues.
"From there, users, already educated about using, sending, and acquiring crypto, can jump into all kind of financial assets, including physical ones, like diamonds, always knowing they can transition back to set prices as opposed to volatility.
"Crypto has proven that those who can learn about the new class of financial assets will be privileged when the final wave of adoption hits us."
If the platform takes off, it is likely that diamonds could end up playing a key role in the African crypto market for years to come - particularly for entrepreneurs who are looking for a stable way to store their funds.
There are lots of aspiring entrepreneurs in Africa, and there is still a lot of room for growth in the crypto market. For those who are ready to find unique ways to bridge the current gaps and help the continent to grow, the rewards look promising.