AHREN POSTHUMUS: SA needs Web 3.0 to catch the digital train

The transition to Web 3.0 is being felt in sectors across the world — and South Africans have an opportunity to benefit from early adoption.

Blockchain technology and its ability to provide immutable, incorruptible and unhackable protection to digital asset owners are becoming more significant by the day and quickly gaining global recognition. Increasingly, business and the way individuals hold assets will be driven by this technology. Blockchain technology has momentous applications in Africa, and we have good reason to fast-track its adoption.

Despite its benefits, there has been a relatively minimal or slow uptake of the technology in SA compared to other developing economies; Nigeria is expected to have the biggest growth in nonfungible token (NFT) adoption this year, for example. In 2021 fintech firm Finder released the results of a survey that showed only about 8.3% of SA internet users owned an NFT. This is below the global average (across the 20 countries in the survey) of 11.7%.

This slow uptake makes sense in the SA context. With the endemic fraud and corruption in the country it is easy to understand scepticism about digital asset ownership and transfer — especially if information about the technology is not easy to digest and access to it is difficult.

It should also be viewed in relation to the headlines about “cowboys” in the industry who make minting (placing a digital asset on blockchain that creates an NFT) and trading NFTs appear to be exclusive, and not necessarily reflective of underlying value and utility. To change this perception SA needs more actors in the space who do place a high value on ubiquity, utility and accessibility. Momint, for example, has made the minting of NFTs free on its platform as one of the ways to do just this. Encouraging the proliferation of relatively affordable NFTs in the market is another.

Accessibility

This approach, which focuses on accessibility, is at the heart of Web 3.0 — the idea that the future of the internet will be driven by blockchain technology with decentralisation and tokenisation as core pillars (that is, with the ownership of assets divided into tokens with multiple holders, and not centralised in any single authority). If SA is going to reap the economic benefits of digital transformation it must take this approach to speed up the adoption of Web 3.0 opportunities.

SA is a country with deep and well-entrenched inequality a persistent driver of which is uneven access to economic opportunities. Take the case of art. There is certainly a vast number of artists who are currently in low- or lower-income brackets, likely to be living in informality, in SA. Their work has huge value and the potential to significantly improve their economic circumstances, but a lack of connection to the right network and know-how will be a big roadblock in their pursuit of a career with significant economic return.

For these artists access to a market to sell their work overseas currently is a pipe dream — unless they have connections with some form of middleman (often galleries, which take a significant commission) who can promote and sell their work. NFTs, utilising blockchain, can change this dynamic significantly, allowing artists in informal settlements (and indeed any income bracket or circumstance) essentially to sell their work directly to a global audience.

It also allows them to continue to earn royalties in perpetuity, depending on the contract built into their NFT. This is all made possible because NFTs and blockchain allow for ownership and the trade of digital assets in a decentralised manner (taking out the middleman and empowering the individual). Many NFT exchange platforms allow for this trade at much lower commission than traditional galleries, maximising individual earnings.

Social investment

NFTs present opportunities for sectors far beyond the art world and for society at large. From property and investment to finance and publishing, there are multiple avenues for NFTs to change the way each sector operates for the better. NFTs, and NFT auctions, have a particular value add in SA in terms of tackling inequality over and above the ability to empower individuals with digital assets. The technology can change the way companies and individuals approach social investment. Corporate social investment/responsibility and private philanthropy have traditionally mainly been longer-term partnerships with complex funding agreements that take time.

In November 2021 Momint held Africa’s first NFT auction and it showcased how NFTs can mobilise funding for civil society in short order. One of the items sold was the first-ever NFT of a digital twin for a rhino horn. The lot went for a record R105,000 to the benefit of Black Rock Rhino, a conservation programme. In a follow-up auction on March 26 in Cape Town, hosted by Momint, the digital twin of Nelson Mandela’s original arrest warrant was sold for R1.9m (with the proceeds benefiting the Liliesleaf Farm and Museum).

Similarly, an NFT to support Fight Back SA — an organisation that provides self-defence training to women and girls who would not otherwise have the opportunity or resources — sold for R90,000. From funding the preservation of our nation’s history to empowering women, the recent auction showed the value of NFTs and blockchain technologies to driving investment into society itself.

The benefits for SA’s economy and our society are potentially unlimited, but this requires actors in the Web 3.0 space to operate with its original intentions in mind. A focus on accessibility and decentralisation will be key — as will exhibiting the utility and underlying value of NFTs in a reputable manner to build trust in the technology among South Africans.

• Ahren is the CEO of Momint, an SA-based company that provides a social media marketplace for NFTs.