Advantages of Layer 2 Scaling Solutions in Africa|Bankless Africa Weekly Newsletter
This is the Bankless Africa Newsletter, your one-stop plug for well-curated and up-to-date crypto and web3 news around Africa.
You’re right if you thought Layer 2 solutions could help Africa’s overbanked population.
As blockchain technology transforms the way we exchange value, there is an increasing need for scalable and efficient solutions to accommodate the rising demand for cheap and faster transactions. This demand is considerably higher in Africa, where the adoption rate of blockchain-based services is low and financial inclusion is a significant challenge. In this issue, we will talk about how layer 2 solutions address blockchain challenges faced by Africans, the advantages it offers and its potential impact in Africa. We’ll also discuss:
The Lazerpay Shutdown, and
Block TBD’s partnership with Yellow Card.
Let's delve in!
📻 Podcast of the Week
The Bankless Africa Podcast of the Week is titled “Pivoting to Success - Talking Bitsika with Atsu Davoh”. Sats and Gwei's latest crypto news highlight: “Nigeria's crypto regulation x foreign investment | Paxful shutdown | and More”
Bankless Africa’s Miss Purple sat with CEO Atsu Davoh, as he shared Bitsika’s challenges and the importance of knowing when to pivot and evolve as a startup. On the Western frontier, Sats and Gwei bring us the latest news on the decline of foreign investment in Nigeria due to dollar shortage and lack of crypto regulation. It is also a gloomy time for startups, as Paxful announces its shutdown of operations.
Contributors: Salvi, Crypto_freak and Vibrantty
Advantages of Layer 2 Scaling Solutions in Africa
Design: Vibrantty Author: Salvi
Layer 2 scaling solutions have emerged as a promising way to address the scalability issues of blockchain networks without sacrificing decentralization and security. With their ability to increase transaction speed, reduce fees, and enhance user experience, layer 2 solutions are crucial to blockchain adoption in Africa. They can address key scalability challenges affecting blockchain adoption on the continent.
How Layer 2 Solutions Can Address Blockchain Challenges in Africa
Irrespective of the growth in global technology, many African countries lack the necessary infrastructure such as stable internet connectivity, reliable power supply, and proper regulatory frameworks that are required to support blockchain accessibility in Africa. Another major challenge is the low adoption rate of blockchain technology in the region, despite its potential benefits. This is partly due to a lack of knowledge about blockchain technology. Layer 2 solutions can address various blockchain challenges in Africa in the following ways:
Scalability: Layer 2 solutions such as sidechains, rollups, state channels and plasma can address blockchain scalability by improving transaction speed and lowering high fees. This encourages the use of more blockchain-based services in Africa.
Cost-effectiveness: Layer 2 solutions cut costs by processing transactions off-chain, reducing the high transaction fee that deters the adoption of blockchain technology in Africa.
Security: Although blockchain technology is inherently secure, layer 2 solutions can add an extra layer of security by utilizing smart contract-based protocols, which detect and prevents fraudulent activities.
Accessibility: Seeing how Africans have limited internet connectivity. Layer 2 solutions enable low-bandwidth transactions, making blockchain technology more accessible to people in suburban areas.
Advantages of Layer 2 Scaling Solutions in Africa
The number of unbanked and underbanked Africans excluded from the financial system overweigh the scale. Layer 2 scaling solution has the potential to bring financial inclusion to the region with these advantages:
Ability to increase transaction throughput: This will overcome speed limitations by enabling more transactions to be processed. In the long run, this can greatly improve the speed and efficiency of blockchain-based payments.
Ability to reduce fees: Africans face another significant challenge - high transaction fees. Many blockchain networks charge relatively high gas fees. This makes it difficult for low-income individuals to access blockchain-based services. Layer 2 solutions reduce these fees, enabling blockchain services to be accessible in Africa.
Improved User Experience: Many Africans find it difficult to adopt blockchain technology due to its complex and technical nature. Layer 2 solutions improve user experience by simplifying the process of using a blockchain application. Therefore, making Dapps more accessible and user-friendly.
The Potential Impact of Layer 2 Solutions in Africa
Layer 2 solutions have the potential to greatly impact the usage of blockchain projects in Africa in these ways:
Reliance on Layer 2 Solutions such as Rollups and Sidechains: Layer 2s can potentially increase the number of transactions processed within a period, leading to faster and more efficient transactions. This is particularly beneficial for projects that require a high volume of transactions, like those in the e-commerce or fintech sectors.
Greater Security: Some Layer 2 solutions, such as rollups, rely on the security of the underlying blockchain network to provide additional security for transactions. This is another advantage to the blockchain ecosystem in Africa, particularly in areas where fraud and cybercrime are major concerns.
Reducing Transaction Fee: The layer 2 solution ****can make a significant change by making transactions more affordable for blockchain users. This could spark new opportunities for microtransactions and enable financial inclusion for the underbanked population in Africa.
Improving Scalability and Interoperability of African Blockchain Projects: By allowing different blockchain networks to communicate with each other, Layer 2 solutions will create a more interconnected blockchain ecosystem, leading to increased collaboration and innovation that will drive growth and development in Africa.
Increased Adoption: By lowering gas fees and fastening transaction speed, layer 2s increase the chances of adoption of blockchain technology in Africa. This could bring opportunities for businesses to explore innovative blockchain use cases and help drive economic growth in the continent.
Increased investment: Adopting Layer 2 solutions in Africa can attract more investment into Africa’s blockchain industry as investors look to capitalize on the potential benefits of these solutions. This could increase the financial support for local projects and startups.
Bonus: Lazerpay shuts down 😟
The African blockchain startup community is facing tough times. Emmanuel Njoku, the founder of Lazerpay has announced the shutdown of the blockchain payment platform due to insufficient funds to move the company forward. The startup is advising existing merchants to withdraw their funds before April 30, 2023.
🥁 African Adage
Adage: A man that wants to grow must first accept to learn.
Meaning: The growth of Africa and Africans depends on their willingness to learn, adopt, and adapt to innovative technologies like blockchain, as well as utilizing layer 2 scaling solutions.
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😂 Just for Laughs
🔎 Community updates
📻 Bankless Africa Podcast: Pivoting to Success - Talking Bitsika with Atsu Davoh
Highlight on Nigeria's crypto regulation x foreign investment | Paxful Shutdown | and More”
📣 30 Days Content Challenge: Don't miss out on Bankless Africa's "30 days blockchain content challenge" with the aim to educate Africans every day for 30 days on our social media platforms. Follow to learn here
🎧 Check out our Pidgin Parlor podcast| | Wetin be Layer 2 solutions and why we need am with Salvi?
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Disclaimer: This post does not contain financial advice, only educational information. By reading this article, you agree and affirm the above, as well as that you are not being solicited to make a financial decision, and you in no way are receiving any fiduciary projection, promise, or tacit inference of your ability to achieve financial gains.