You might have come across news that IOHK and Cardano are transforming Ethiopia with their new, mind blowing “blockchain”, PoS technology. We have met up with serious and considerable resistance from Cardano folks both in government and in the general public who have bought the charade of marketing Cardano has brought to our country. To us, this issue reeks of outsiders coming to Africa with fake miracle solutions to complex local problems that they have no understanding of; coming here and bringing us “technologies” that are ultimately centrally controlled under the facade that it will fix all of our problems.
Bitcoin has globally opened up a space for people to see the incredible value and use case of cryptocurrency, but many misunderstand what is uniquely valuable and useful about Bitcoin, rather than any token. Here we will describe how Cardano is a centralized marketing force that is not built to accomplish any of the things it promises, from the grounds in Ethiopia. It seems, Cardano marketers have shamelessly plugged in a non-functional, redundant and overblown “blockchain” as a replacement and “improvement” of Bitcoin. Bitcoin can be monumentally transformative for Ethiopia in many dimensions, but that doesn’t mean any random cryptocurrency can be. Bitcoin has unique traits that no other cryptocurrency does, such as decentralization and having a set number of coins which cannot easily be inflated.
So today we decided to do a technical breakdown of Ethiopia’s current difficulties in becoming a modernized nation, why Cardano’s “solution” is completely irrelevant to addressing these problems, why Bitcoin is a perfect solution – and while both use the word “blockchain”, they mean drastically different things.
Ethiopia is trying hard to digitize its economy. Ethiopia aspires to document every individual living within the nation within 5-10 years, because such data is very valuable in knowing where problems exist within the society and going on about addressing them. Digitization makes the velocity of information faster, better, more reliable, and more secure. This might sound strange so let’s unpack a little bit more: You see, Ethiopia is still predominantly a rural country, with only 20% of its population living in urban areas. The other 80%? Well, the government doesn’t know much about them because they are not registered in any database as they live in rural, spread-out areas (often without roads). While not being known by your government might sound like the libretarian dream, it also brings significant physical and food security concerns for both the people documented and undocumented.
Imagine being the Ethiopian government, you can easily collect information about urban areas but you have no idea what is happening outside the cities. You are tasked with solving problems for all of society but to do this properly, you need access to information about what problems do and could arise – and the first task in trying to solve this is knowing who you are serving, where they live and who they are linked to. This type of documentation has already been done in almost every other nation and it’s incredibly insightful in scaled population management. So why are most people in Ethiopia undocumented? It comes down to one simple fact: Infrastructure problems. Infrastructure of modernization is not as simple as buying computers for everyone. It means building roads, reliable maps, providing security and most importantly: providing electricity; then comes data connectivity – and all of that can be summarized into: we don’t have infrastructure because of low export to population ratio; because we are poor. Ethiopia’s current exports are only about 3bn$ annually. That 3bn$ is being used to import essential medical equipment, transportation, food and other essential items, while also combating significant USD inflation. That 3bn$ is divided to the needs of 110+ million people that live in the country. For comparison, exports of the US are over 225bn$. The US is only three times the population of Ethiopia, but revenue from export is about 7500x more than Ethiopia. This obviously limits what the government could do, even if run by saints that cared for the population.
This is the most important reason why most Ethiopians are not documented, it’s not because there isn’t a “decentralized database” where they can hop-on.
Needing a “decentralized” database would be indicative of a different problem: that we are storing data in a centralized database, BUT someone is altering that data and that is somehow stopping us from registering everyone. In such a case, the argument of having multiple copies of data so they are harder to corrupt makes sense. In this case, if what we truly need is to register some data and not be able to alter it in any way, we can always use read-only (RO) filesystems and databases. This does not mean we have to surrender the data to a completely centralized, proof-of-stake system – where we pay Cardno to query data, or whoever controls the supply or exploits the system, can query and alter such sensitive data about millions of people.
Cardano is not a decentralized system, nor will it ever be, as PoS blockchains are not scalable to store large data without forming centralization. A full blockchain node by default stores data of every transaction and data transferred, this means as the data grows so should the size of computing needed to store such data. So if we are storing an ever increasing copy of 100million people into every node, as the data grows rapidly, the amount of nodes that can store such data decreases and can only be stored into specialized and customly made data farming facilities, which means centralization is formed by those who can supply such unique hardware. So the data will be stored in very few places, will form centralization and can be altered by those who own such mines. In this case, it’s fair to use the assessment that such a blockchain is “distributed” and not really “decentralized” – it’s important to find the distinctions here. Because, what else is distributed? Facebook is another example of a distributed but centralized entity. This means, Facebook does have data-farming facilities all around the world, some in North America, some in Ireland, some even in South Africa but all of these facilities are controlled by Facebook, we don’t go around saying Facebook a decentralized database, as that is not true.
Modern computing infrastructure sharing or commonly known as the “cloud”, is often a centralized but distributed system. Amazon Web Services, Google Cloud, and Microsoft Azure are the most popular cloud infra hosting environments as of today. All of them provide a service that does not copy data unnecessarily into every computer (in blockchain known as “node”), because that is just a waste of space, performance, memory, time, bandwidth and does not guarantee any extra security layer other than making the data redundant. The data has an obvious owner, and a secondary layer of proxy ownership and that’s that. There are no hidden shenanigans about who owns the data or who can alter it, because truthfully, whomever provides the physical infrastructure controls the data.
If what we need is “distribution” and not “decentralization”, then why can’t we use a service similar to Amazon Web Services (AWS)? Because, we can encrypt the data with all the necessary parameters, develop roles of authorization of who can query such data and not unnecessarily spread it across the world. If what we really need is to write something once and not have it be alterable, the READ-ONLY or WRITE-ONLY solutions are easily implementable within these cloud infrastructure providers. But better yet, Ethiopia can easily host its data physically within Ethiopia in its own infrastructure. The need to use a “blockchain” makes less and less sense the deeper you go.
Why is already existing data easily corrupted or untrusted?
Why we actually should not want the READ-ONLY or WRITE-ONLY databases is corruption. The reason some data in Ethiopia can’t be trusted is because of corruption. People who have the role and ability to document or query data either physically or digitally are prone to corruption, because again, we are talking about an extremely poor nation. Using a blockchain based or digitized storage is not going to magically solve this.
Consider this example: A wealthy person offers someone who works for the government and can register citizens a 500$ bribe to register a fake name, address and identity. That amount is more than the average government employee’s monthly salary – it’s not shocking that some employees might take the money and create a fake identity. The problem here is human input – which in this case is easily corruptible. Now let’s add a “blockchain” to this, did we solve the problem? No. The problem remains: human input. to do digital registration, even to a Cardano database, human input is necessary.
It doesn’t matter if the “credit system” is truly decentralized if you can always pay a bribe to the management and they add/remove things for you.
This is the current problem too. We know Ethiopia’s problem is not that the data we collected about our citizens isn’t being stored in a “decentralized” way. The way we see it, using a secure government backed read-only distributed database in a server we don’t control would let us store and keep the data safely with an identical layer of protection. Still, the security problem remains open and unsolved. How is Cardano going to help when I make a 5k$ bribe to my “kebele” person, whose average income is 300$, to permanently set up a fake profile for me with fake credit? It seems going around claiming that Cardano is now in Ethiopia and therefore now the data can be trusted, is a bit strange. Because it’s the same data, the same people input it, it’s just stored in a different database.
The data is ultimately human input. Human input is corruptible, especially in a poor nation. You can’t claim to have solved corruption/security simply because you have provided database access. The problem is biased/corrupt human input, not where it is stored. In fact I doubt fear of database alternation was ever the governments or their citizens’ fear. One can only say such things because they don’t know how things work and haven’t even bothered to investigate. They come here and assume slapping the word “blockchain” onto it will magically solve a complex problem that can be simplified into: being a poor nation with no infrastructure.
While there are plenty of things computer systems can do to fight off human corruption and bias, it is difficult to imagine this system which is just a distributed aws-like database will do anything substantial. As far as we can see, the products built by Cardano as a demo are simple web-applications, which are prone to normal web application vulnerabilities like XSS, SQLi, XSRF… we just don’t see how it has *ANY* special layer of security and not just a regular web app that has a backend database that stores data in a distributed network. Mind you, nowadays most modern apps that use distributed systems like AWS automatically use that sort of distributed structure too. It is very important to pause and wonder how any of this solves corruption, or infrastructure based problems. Plenty of other scammy proposals made by Carano have been documented by Kal Kassa for few years, who has been tracking their leadership, what they say and what they actually do on an article titled “Shitcoin Millionare”.
But how does one address Corruption and Infrastructure based problems?
Here at project mano, we have been pitching multiple proposals for multiple government bodies both publicly and privately about how transformative Bitcoin is to the energy sector while simultaneously fighting off the rapidly growing danger of scarcity mentality.
We understand the government needs a new and lucrative revenue stream for it to quickly address the infrastructure problem and decrease corruption by providing a hopeful future. Unfortunately, Ethiopia’s economy is projected to grow only 3.8% by the IMF. This is while the actual inflation rate of the USD is around 25%. For Ethiopia to break even with last year’s income, it needs to grow another ~20%+ just within a year, which is not just a silly ask, but an impossible one as well. Traditional investment avenues into trade, tourism and production aren’t gonna cut it. If this continues for a few more years, even with a rapidly increasing and capable working force, Ethiopia is going to struggle more in the coming years. But there is an easy way around this. We will quote an article we published on Bitcoin Magazine below:
For Ethiopia, the only solution is to live outside of the centralized economic system of the world. If, instead of choosing between which foreign superpower should influence us, we want real sovereignty, we will need real, non-fiat, internationally-respected, hard money that we can produce entirely on our own. Freedom and sovereignty aren’t possible when all of the items we seek are audited by the centralized SWIFT system for days before they are allowed or denied.
Ethiopia doesn’t have much that it can sell without the approval of the superpower nations. The only thing that can be sold without anyone’s approval is energy — not to a nation, but to a network. The Bitcoin network pays energy providers (“miners”) with bitcoin and Ethiopia has enough installed generation capacity to make $4 billion to $6 billion per year, just in the short term — easily doubling or tripling its current exports (3bn$) to 7bn$ – 9bn$.
Ethiopia also has about 60,000 megawatts of untapped potential energy capacity, and with only 6,000 megawatts, Project Mano has projected that bitcoin mining would yield $2 billion to $3 billion annually at $25,000 BTC prices, or more like $4.5 billion to $6 billion at BTC prices at ATH.
Ethiopia’s new flagship project, GERD, can generate 6,000 megawatts by itself and remains remote, making it very expensive for internal or external use, but perfect for Bitcoin mining. Quoting Alex Gladstein again:
“Billions of people in developing nations face the stranded power problem. In order for their economies to grow, they have to expand their electrical infrastructure, a capital-intensive and complex undertaking. But when they … build power plants to try and capture renewable energy in remote places, that power often has nowhere to go… Here is where bitcoin could be an incentives game-changer. New power plants, no matter how remote, can generate immediate revenue, even with no transmission lines, by directing their energy to the Bitcoin network and turning sunlight, water or wind into money… With bitcoin, any excess energy can be directed to mining until the communities around the plant catch up.”
This is what Ethiopia should be doing to counter the crazy fiat system, while also developing its infrastructure easily and quickly. Ethiopia should Provide power to the Bitcoin network to generate billions of dollars to use for its own aspirations, with un-sanctionable money that can be converted to any country’s currency at any time without anyone’s approval. All Ethiopia needs to do to generate billions of dollars is to use its already-installed generation capacity. But that’s not where its potential ends: The 60,000 megawatts of potential energy that the country has is obviously not easy to realize. If Ethiopia invites Bitcoiners around the world to help us realize our energy potential, they will come to help set up power infrastructure that the population can use, while also helping to convert the excess energy into money that is fully sovereign. All Ethiopia has to do is open its arms and express its energy and infrastructure aspirations. The nuances of these agreements will matter greatly, but if planned well, all Ethiopians will benefit.
Any power source, no matter how remote, can be used to mine bitcoin. The more energy we realize, the more we will develop our economy, the faster we close our trade deficits — the more bitcoin we will mine, the more energy we will realize, the more our economy grows. And this will all be a repeating cycle.
This is the easiest, fastest and most reliable way Project Mano sees in how to satisfy our energy aspirations, develop much needed infrastructure and create a hopeful future that greatly limits corruption and advance the digitization aspiration into a reality. All of this is greatly discussed in detail at the Project Mano proposal at bitcoin.com.et – we are Ethiopia loving patriots tired of seeing snake-oil marketers taking advantage of our beloved nation. We hope the government of Ethiopia seriously considers kicking Cardano out and implementing a bright future for all its children by mining and holding Bitcoin.