May 22, 2024 • 54min
BTC183: Bitcoin Investing Opportunities in Africa w/ Abubakar Nur Khalil
We Study Billionaires - The Investor’s Podcast Network
Key Takeaways
- Bitcoin adoption in Africa is grassroots-driven, with Nigeria leading in terms of peer-to-peer trading volume and overall adoption despite government resistance
- The Nigerian government's ban on cryptocurrency in 2021 ironically accelerated Bitcoin adoption by forcing people to use peer-to-peer trading methods
- Bitcoin mining is gaining traction in East Africa, particularly in countries like Ethiopia that have excess renewable energy and supportive regulations
- Be Trust, founded by Jack Dorsey and Jay-Z, is working to increase Bitcoin development and education across Africa through grants and developer training programs
- Recursive Capital, founded by Abubakar, is the only Bitcoin-focused VC fund investing in early-stage African startups building Bitcoin infrastructure and applications
- Key areas of focus for Bitcoin in Africa include improving Lightning Network adoption, developing Bitcoin mining operations, and increasing energy/monetary sovereignty for African nations
Introduction
In this episode, Preston Pysh interviews Abubakar Nur Khalil, a Bitcoin Core contributor, founder of Recursive Capital, and board member of Be Trust. Abubakar provides insights into Bitcoin adoption and development across Africa, with a focus on Nigeria. He discusses the regulatory landscape, peer-to-peer trading dynamics, Bitcoin mining potential, and his work with Be Trust and Recursive Capital to accelerate Bitcoin growth on the continent.
Topics Discussed
Abubakar's Background and Introduction to Bitcoin (1:54)
Abubakar shares how he became interested in Bitcoin and programming:
- Finished high school in 2016 and started learning about Bitcoin in early 2017
- Initially found Bitcoin articles too technical, so began studying computer programming
- By 2018, was teaching himself how to code
- Made his first Bitcoin Core contribution in 2019 after seeing another Nigerian contributor
- "By 2018, I was just hooked on it. To be honest, that was all I was doing. Anything I could get my hands on, textbooks, articles, videos, everything."
Bitcoin Adoption and Regulation in Africa (6:59)
Abubakar provides an overview of Bitcoin adoption across Africa:
- Nigeria leads in adoption, particularly for peer-to-peer trading
- Initial government resistance and cryptocurrency ban in 2021
- Ban ironically accelerated adoption by forcing P2P trading
- East Africa seeing growth in Bitcoin mining, especially Ethiopia
- South Africa as a middle ground with both P2P adoption and infrastructure development
"I firmly believe, if you were to attribute the growth of the P2P market, the Bitcoin P2P market in Nigeria, as well as the actual share adoption levels that we've seen over the last few years to one entity, it would likely be the Nigerian government. Ironically, because that ban set in motion a lot of things."
Be Trust: Accelerating Bitcoin Development in Africa (32:48)
Abubakar discusses his role on the board of Be Trust, founded by Jack Dorsey and Jay-Z:
- Selected from over 7,000 applicants to be one of four board members
- Mission is to increase Bitcoin development, education, and adoption in Africa
- Acquired the Qala program to create a pipeline for training African Bitcoin developers
- Providing grants for developer groups, conferences, and open-source projects
"In general, all what to expect really from Be Trust is in the next five to ten years the reason why you would have a ton of excellent developers out of Africa will be because of Be Trust. And at the same time the aim is for us to sit back into the background of just core infrastructure that allows for this ecosystem to flourish."
Recursive Capital: Investing in African Bitcoin Startups (41:40)
Abubakar explains the thesis and strategy behind his VC fund, Recursive Capital:
- Only Bitcoin-focused VC fund investing in early-stage African startups
- Thesis is that Africa will define what it means to be a "Bitcoin company"
- Focuses on infrastructure-level investments to compete with holding Bitcoin directly
- Invests $50,000 to $100,000 in startups with MVPs, also has "Recursive Labs" for earlier stage ideas
"The thesis itself is we're banking on Africa. Because one, the developer base is just too talented and I think there's going to be at the forefront of development in general. We're already starting to see some of that with leading developers coming out of the continent. But two, I feel the definition of a Bitcoin company will continue to evolve and mimic exactly the companies that will come out of Africa because of the problems that we have because Bitcoin uniquely solves those problems."
Political Risk and Regulatory Landscape (49:17)
Abubakar discusses navigating the regulatory environment for Bitcoin in Africa:
- Recursive Capital structured outside Nigeria to avoid direct regulation
- Engages with regulators to stay ahead of potential issues
- Balances visibility to attract entrepreneurs while avoiding regulatory scrutiny
- Focuses on strategic investments that can succeed with or without regulatory clarity
Exciting Developments for Bitcoin in Africa (52:53)
Abubakar shares what he's looking forward to in 2024 and beyond:
- Lightning Network adoption and innovations like Machankura for feature phone Bitcoin wallets
- Projects building regulatory resilience into their design
- Growth of Bitcoin mining and its impact on energy sovereignty for African nations
- Potential for African countries to hold Bitcoin reserves and gain monetary sovereignty
- Goal of growing Africa's Bitcoin mining hash rate beyond the current 1%
"We're going to get to a state, I believe, where that is going to play a huge part in how Africa is viewed as a continent when electrification is so ubiquitous as a result of Bitcoin mining as well as foreign reserves being in Bitcoin and what that means for their sovereignty, monetarily speaking, especially in the Francophone area, where they're able to regain monetary sovereignty as well as their actual energy sovereignty, too."
Conclusion
This episode provides a comprehensive overview of Bitcoin's progress and potential in Africa, particularly through the lens of Nigeria's experience. Abubakar Nur Khalil offers unique insights as both a Bitcoin Core contributor and investor in the African ecosystem. Key themes include the grassroots nature of Bitcoin adoption, the potential for mining to drive energy development, and the work being done by organizations like Be Trust and Recursive Capital to accelerate Bitcoin growth on the continent. Despite regulatory challenges, Africa appears poised to play a significant role in Bitcoin's future development and adoption.
