Author: EMMANUEL ASAMOAH, COINTELEGRAPH; Translation: Song Xue, LianGuai
When I was young, I walked through cocoa farms in Ghana with my grandfather, who was a soldier and later became a farmer. He shared how these beans sparked pride and economic growth in our country. With the advent of the digital age, I often wonder: is the tokenization of modern miracles what my grandfather and countless cocoa farmers need?
Despite having vast agricultural and mineral wealth, many African countries still face limited opportunities to enter the global market, unfair trade conditions, lack of transparency in transactions, and susceptibility to market manipulation. These challenges hinder economic growth, perpetuate poverty, and prevent many Africans from fully realizing their potential.
For decades, Africa’s economic potential has been stifled by vested interests from external forces. While the economic control strategies of the colonial era may have disappeared, modern neocolonialism subtly prevails. It thrives through unfair trade agreements, economic policies dictated by global financial giants, and a complete lack of transparency in international transactions.
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Take the Ghanaian government under President Nana Akufo-Addo as an example. Since 2017, the government has received $3 billion in loans from the International Monetary Fund. While these loans may temporarily fill the treasury, they also deepen the country’s debt.
Nana Akufo-Addo could have advocated for the tokenization of commodities instead of seeking loans from the International Monetary Fund. Tokenizing Ghana’s key commodities such as gold, cocoa, and oil on the blockchain would create significant economic opportunities. In 2022, Ghana’s gold production is estimated to be 3.7 million ounces worth $6.7 billion; cocoa production reaches a record-breaking 689,000 tons worth $1.65 billion; and oil production is around 150,000 barrels per day.
Considering these figures, one can imagine that such initiatives in Ghana could increase the trade value of these commodities by billions of dollars. According to the Boston Bank, the current market price for gold is $1,909 per ounce, cocoa is $3,340 per ton, and oil is $82 per barrel. Tokenization can significantly reduce transaction costs, which can be much lower than traditional methods. Economic activities brought by global trade can greatly increase Ghana’s income.
Commodity tokenization, especially Ghana’s gold reserves, provides a new avenue for driving economic development. Let’s delve into its meaning: Ghana can use its physical gold to back digital tokens, such as the decentralized stablecoin Dai, supported by various real-world assets. These tokens anchored to tangible gold become globally recognized digital currencies.
Why would someone buy this gold-backed digital currency? Investors and countries seeking stable digital currencies will be attracted. It’s not just a digital asset – each token has real value backed by gold. This is a way for investors to hold gold without the physical limitations, making it particularly attractive in the digital age.
How will this diversify Ghana’s sources of income? Well, tokenization opens up new revenue streams. Traditional gold sales still exist, but now there is an additional source: digital gold sales. Ghana benefits every time tokens are purchased. Additionally, the country can charge fees or premiums on these digital transactions.
Lastly, this move will put Ghana at the forefront of digitization. Being a pioneer in initiatives like this can change the game as the digital economy rises, allowing Ghana to dominate its economic narrative in the digital field.
If exploring the potential income from tokenized commodities, it could provide a viable alternative to microfinance. Take Ghana’s Finance Minister, Ken Ofori-Atta, for example. His policies tend to tax the poor. It’s puzzling that in this rapidly evolving digital age, establishing clear regulatory frameworks for cryptocurrency technologies is not a priority. Does this hesitation stem from a fear of losing control over traditional financial power structures? Or is it just a lack of foresight?
In addition, international institutions like the World Bank have shown inertia in promoting innovations such as cryptocurrency tokenization. Why do they seem more interested in extending loans rather than creating an environment that encourages self-sustainable development through technology? Do they have underlying motives that prioritize their own interests over genuine development in Africa?
The prospects of blockchain technology offer a beacon of hope for addressing these injustices. By adopting blockchain, countries like Ghana can ensure a certain level of transparency, with every transaction being recorded and immutable. This transparent approach becomes a powerful weapon in combating corruption and illegal money flows, and a step towards better governance.
Tokenizing commodities through blockchain also allows for direct trading, effectively eliminating the need for intermediaries who historically profited unfairly. This ensures that farmers and producers receive their fair share.
A decentralized financial system could pave the way for greater self-sufficiency and diminish the overall influence of neocolonial interests, instead of relying on external financial giants. Additionally, the potential of tokenized commodities demonstrates the enormous opportunities that blockchain brings in introducing new revenue streams, reducing external debt, and boosting the overall economy.
Ghana could also propose using its gold reserves to support DAI in a similar manner. Botswana could do the same with its diamond reserves. These traditionally undervalued or poorly traded commodities can now generate significant income. By tokenizing these assets, Ghana can not only sell gold at international market prices but also introduce tokenization premiums and fees, which could become a brand-new source of income.
If there are any signs from actions taken by companies like Goldman Sachs and BlackRock, tokenization could be a huge market opportunity. Embracing blockchain can add trillions of dollars to the African continent. It can stimulate job creation, increase investment, and so on.
However, to realize this potential, challenges in logistics need to be addressed, including storage, transportation, and tax considerations. Trust and security are also crucial and may require third-party audits from globally recognized companies. Audits from companies like KPMG or PwC will provide important credibility and assurance for the entire tokenization process, enhancing global investors’ confidence in the integrity and security of the Ghanaian tokenized commodities market.
If Ghana provides a robust regulatory framework for visionary cryptocurrency entrepreneurs, blockchain-driven growth could lead the country’s economic revolution. This revolution could have a ripple effect throughout the entire African continent, regardless of whether African governments have lived up to people’s expectations. For me, this is not just speculation. It is a call for reflection and action.
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