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El Salvador is First to Use Bitcoin as Legal TenderOn Wednesday, June 9, El Salvador made history by becoming the first country to authorize the use of bitcoin as legal tender. President Nayib Bukele’s proposal to utilize the currency was widely popular in Congress. The votes came to 62 out of 84 in favor of instating a law to adopt bitcoin as the country’s legal tender. The introduction of bitcoin will greatly help the facilitation of remittances sent back home from Salvadorians living abroad. This is important as one in four Salvadorians live abroad. In addition, more than $2 out of every $10 in the country’s economy comes from remittances. Therefore, incorporating bitcoin as legal tender should only improve access to financial resources throughout El Salvador’s marginalized communities. Shortly before the bill was passed, President Bukele tweeted about the economic benefits of having bitcoin as legal tender: “It will bring financial inclusion, investment, tourism, innovation and economic development for our country.”

The Benefits of Bitcoin

The authorization of bitcoin as legal tender may be a developing trend across emerging economies. This is because bank penetration and access to traditional financial institutions are remarkably low. In El Salvador, more than 70% of the population lacks any connection to traditional financial services. It is due to these circumstances that Salvadorians have found themselves so reliant on remittances. In the past year alone, remittances contributed a fifth of El Salvador’s total GDP. With the domestic economy so dependent on remittances, it is clear why Bukele would craft a bill intended to ease the process for sending money back home from abroad.

Through cryptocurrency, Salvadorians will be able to send money to impoverished loved ones at a much affordable and quicker rate. No longer will those working in the global north have to rely on remittance firms. Rather, converting local currencies to and from bitcoin requires only an informal broker.

President Bukele will use significant domestic resources to help train the Salvadorian population to carry out bitcoin transactions. El Salvador’s commitment to cryptocurrency will not only forecast the future relevancy of cryptocurrency but act as a case study for other emerging economies that may be interested in eventually adopting bitcoin as legal tender. “The market will now be focused on adoption through El Salvador and whether other nations follow,” said Richard Galvin of crypto fund Digital Asset Capital Management. “This could be a key catalyst for bitcoin over the next two to three years.”

Moving Forward

In the past, people have criticized bitcoin mining for its harmful environmental footprint. However, El Salvador has made a concerted effort to ensure its bitcoin operation uses complete renewable energy. President Bukele has repeatedly stated that El Salvador’s state-run geothermal energy mechanisms will convert power derived from volcanoes for bitcoin mining. Scorching steam generates the power that can spin turbines and generate electricity. Going forward, bitcoin holds enormous potential in driving renewable energy projects across the world, especially in emerging economies.

– Conor Green

Photo: Flickr

cryptocurrency in AfricaCryptocurrency in Africa has become increasingly popular over the last couple of years, as many people become more interested in the possible economic benefits that can come from the new technology. Cryptocurrency is entirely digital money that uses a decentralized system. As a result, there is not one entity with complete authority over the process. The whole system works over the internet allowing transactions to happen anywhere in the world with no government regulation. Bitcoin, created in 2009, is the leading cryptocurrency company in Africa. There are a variety of users, from individuals to small businesses, that use the technology for investments, banking and payment transfers across borders.

Why Cryptocurrency is So Popular in Africa

In April 2019, Google Trends data showed that Nigeria had the world’s most searches for Bitcoin. Also in 2019, South Africa has the highest volume of cryptocurrency ownership compared to internet users. It was found that 10.7% of internet users in South Africa owned Bitcoin compared to the worldwide average of 5.5%.

In 2020, despite the global economic uncertainties, COVID-19 brought by businesses closing and people not working, Bitcoin trading has continued to increase in Africa. In May 2020, Nigeria had the highest trading volume in one week at $7.2 million, its third-best P2P trading week. Kenya was second with another record week by trading $1.6 million. South Africa came in third exchanging $1.1 million in a week.

Cryptocurrency in Africa mainly gained wide popularity because of high inflation rates across the continent. In 2018, South Sudan saw rates of 83.5% compared to the previous year. Other countries like Nigeria, Ghana and Zimbabwe, who printed $100 trillion notes worth only $40 in 2015, also experienced double-digit inflation rates. These hyperinflation rates had many citizens doubting the economic services of their central banks and governments.

Benefits of Cryptocurrency

In an effort to protect their money from the economic turmoil in their country, Africans started transitioning to Bitcoin. Since companies like Bitcoin have no single domain, the money inside the company is not affected by a single country’s inflation rate, which allows the citizens of African countries to protect their money from a failing economy. As a result, trust for these cryptocurrency companies builds.

Cryptocurrency in African also gives its people the ability to make cross-border payments. Some African countries have a history of fraud which had caused problems with international money transfers. In Nigeria, PayPal banned citizens from receiving money from other nations because of the country’s problems with fraud. However, cryptocurrency allows these citizens to transfer and receive money from anywhere around the world without the high fees that other money transfer companies usually have.

Cryptocurrency companies are blockchain technology that stores public records in a decentralized system. This also makes it impossible to alter transactions and assets. Many African countries use this new technology, through companies like Bitcoin, to elevate their status. They also use this technology to continue pushing their economy up to a level playing field with other nations. In 2019, Kenya and Nigeria announced plans to work more closely with these companies. These countries hope that by regulating cryptocurrency companies and their technology, the governments can begin bringing its people out of immense poverty and start becoming a greater global power.

– George Hashemi 
Photo: Flickr

Blockchain Technology
With the development of bitcoin technology and other cryptocurrencies, the avenues for technological progress in the realm of poverty alleviation is improving. With more than 1.3 billion individuals living under the threat of global poverty, it is important to structurally bolster market economies.

Despite the great degree of skepticism regarding the volatility and often, the unpredictability regarding blockchain technology, it can still be a new and innovative solution to potentially remediate global poverty, especially among lesser economically developed countries.

Financial Inclusion

Financial inclusion is an imperative U.N. Sustainable Goal and blockchain technology can finally provide nearly 2.5 billion people with better opportunities and access to banking and financial services in the near future, especially as it allows for a more decentralized database. Blockchain technology will prove particularly effective in more remote, rural communities around the world, especially in the case of increasing social mobility.

Blockchain technology can act as a central banking system especially due to its decentralized nature. It can help cut down on remittance fees because traditional banking systems usually tend to charge high transaction costs. These fees account for nearly $4.32 billion among south Asian countries. In countries like India with a significant expat and migrant population living overseas, blockchain technology helps with transferring funds back home. Virtual currencies can eliminate a number of costs and improve the efficiencies of transactions. They may also be a lot more stable as compared to the financial system as it is vulnerable to national and global economic headwinds.

Moreover, it can be easier to secure property rights and undertake secure investments. Buyers and sellers are able to interact in a secure environment, and record transactions and fraud. With increased ownership of property, a number of countries like Brazil, India, Rwanda and Georgia have set up land magistrates. With more financial inclusion, consumers also have greater opportunities to engage in microtransactions and lending, as well as trading due to minimal interest rates on loans. The chances of setting up start-up businesses and enterprises may also be higher as a result.

Tackling Corruption and Enforcing Accountability

Owing to the reliability of blockchain technologies like Bitcoin, information and transactions are a lot more secure. On the macroeconomic scale, people can channel taxes, loans and funds a lot more efficiently. This can also help improve accountability and transparency of important government funds.

Globally, many countries have inculcated a number of blockchain projects in the health care and education sectors. As a result, governments can take the opportunity to allocate funds to different sectors of the economy and perhaps even extend it to providing development aid and funding to improve social welfare, infrastructure and other services. Likewise, due to transparency, it is also easier to provide people insurance in key realms. For instance, Copenhagen based SPACE10 is embarking on a project that seeks to combine blockchain technology and solar power as centralized sources and off-grid systems are often not economically and cost viable.

Additionally, making donations and conducting philanthropic initiatives may also become more secure and reliable with the further development of blockchain technology. Using this model, nonprofits and international organizations may be able to channel crucial aid, funds and other services through new avenues as well.

To conclude, if bitcoin technology is enforced, it is crucial to transcend the required education and awareness about it to avoid a lack of information and financial risks. With better financial avenues and services, a larger proportion of people will be able to participate in the global market. Further development of blockchain technology can help correct weaknesses and structural limitations in the long run.

– Shivani Ekkanath
Photo: Flickr

Cryptocurrency provides access to energy
Access to energy is necessary for daily life in most countries in the world. Electricity allows for economic development and innovation as well as securing basic human rights such as health and security. However, there are more than 1 billion people living without access to energy.

Solar Power and Cryptocurrency

One negative effect of not having secure and affordable access to energy is the expenditure that goes into coal. This leads to impoverished people being forced to buy expensive coal which further leads to environmental and health problems.

As a response to the scarcity of energy, the International Energy Agency confirmed that decentralized energy systems such as solar power would be the lowest cost option for electrification across sub-Saharan Africa due to its geographical location as well as the accessibility and practicality of the solar panels. With solar power, impoverished communities could use the electricity from solar panels to improve education, healthcare and socioeconomic developments.

Crytoeconomy Fueling Solar Energy Initiatives

This is where The Sun Exchange, a solar micro-leasing marketplace, and Powerhive, a rural mini-grid solutions provider, are partnering up to use crypto-economy to create a fully decentralized, blockchain-based global economic system that could distribute the full potential of solar power to impoverished people.

Sun Exchange states its purpose as buying solar cells and leasing them to schools and businesses in areas with a lot of sunlight. Fortunately, this lines up perfectly with the sub-Saharan region of Africa. Powerhive states that its purpose is to develop off-grid utility solutions to create a future where everyone has access to energy.

“Together, we are working towards a world where no one is forced to cook with unsafe kerosene or wood-burning stoves, no child has to worry about how they will study after dark, and lack of energy access ceases to propel cycles of poverty,” said Abraham Cambridge, Founder and CEO of Sun Exchange. “Our partnership with Powerhive underscores the SUNEX token sale opportunity to support a crypto project geared directly towards reducing global inequality and climate impact.”

For example, the new joint initiative plans to fund up to 150 new Powerhive rural mini-grid projects which will provide access to energy for 175,000 people in Kenya.

“At the heart of our projects are the communities we serve,” said Christopher Hornor, Founder and CEO of Powerhive. “By providing the power platform first and then layering in productive use programmes, we create a virtuous cycle of economic and personal empowerment that provides steady profits for both our customers and our investors. Our partnership with Sun Exchange will now give almost anyone the opportunity to invest in innovative low-carbon development projects in Africa and beyond.”

This partnership allows for the international community members to help improve lives across the world and make a small profit. This is possible because through Sun Exchange, individuals across the globe are able to purchase and own remotely-located solar projects set up by Powerhive.

The buyer would now earn a return for the power generated by his or her solar asset while the energy would undeniably improve the life of whoever received that energy in rural Africa. Also, because the payments are done through cryptocurrency such as Bitcoin, there are no complications that result from international transactions.

Hornor sums up this partnership as a positive step towards the future for renewable energy and universal access to energy. “The crypto-economy is the best tool we have to fight poverty, hands down. Our customers are hard-working people who have been excluded from the global economy. Now, we are able to bring them onto a platform of modern, clean power and to offer support for new businesses and opportunities for personal and intellectual enrichment.”

– Jenny S. Park
Photo: Flickr

Blockchain Technology and PovertySince its conception, blockchain technology has become widely synonymous with the cryptocurrency Bitcoin. However, the utility of blockchain comes not necessarily from its manifestation in online currency but the nature of its security and accessibility. These two features are what make blockchain technology and poverty so interlinked. It holds promise as a secure and equalizing tool for the world’s poorest and most rural.

The inner mechanisms and mathematical coding of blockchain are highly complex. The principle is simple. It is a public ledger, stored and spread across multiple networks in countries around the world, making an impermeable information network. The decentralized nature of the data stored on blockchain allows for its application across all sectors without risk of disruption.

Significant to alleviating poverty, blockchain technology’s secure nature allows for it to be used as a financial services platform. In both urban and rural areas of developing countries, banks can be hard to come by, expensive to set up an account in and somewhat unreliable.

Cryptocurrency services can be scaled up and down to be incorporated into everything from the most basic phones to the world’s most sophisticated smartphones. This cryptographic technology would allow its users to send money directly to other individuals without a middleman or “trusted third parties” which take a percentage as a fee for its services and can be largely inaccessible.

Estimates suggest that by 2020 over 70 percent of the world will have access to smartphones. With financial technologies such as blockchain services, there is a real chance for those in rural or economically unstable countries to secure themselves without huge risk. Blockchain technology and poverty could have a progressive and important relationship.

By using cryptocurrencies or internet-money, individuals in financially insecure nations can take steps to avoid financial vulnerabilities, such as fraud or hyperinflation. M-PESA, a mobile money-transfer and micro-loan financing company, operates all across Africa and in parts of central Asia. Numbers from early 2017 suggest that M-PESA’s user base allowed approximately 186,000 families, two percent of Kenyan households, move from poverty into sustainable working conditions.

Blockchain’s financial services allow for mass participation in the most remote parts of the world. A wide range of business owners can build financial credibility. Currently, Chinese pharmaceutical companies receive assistance from Yijan, a blockchain created by IBM and Hejia, a Chinese supply management company.

Significant and notable players on the international landscape are quickly getting involved in blockchain techniques. The Bill and Melinda Gates Foundation’s Level One Project aims to use digital financial services to bring the impoverished into the formal economic ecosystem, providing them with the tools necessary for financial mobility.

In early 2017, the United Nation’s World Food Programme (WFP) incorporated blockchain technology and cash-based transfers into its humanitarian aid outreach in Pakistan. By using mobile-transfers, the WFP ensured that those in need were receiving financial aid without the risk of the disruption possible with cash-based aid. The technology-based transfers also allowed for the WFP to streamline its tracking system. Since the success in Pakistan, the WFP has chosen to expand blockchain to other humanitarian efforts.

These are a few of blockchain’s many applications. Its reach and potential as a tool for poverty alleviation are great, especially if utilized jointly by governments and NGOs. Although it may be no panacea, the incorporation of blockchain technology may be a significant macro approach in solving the systematic issue of poverty. Blockchain technology and poverty disruption may be one of the most exciting aspects of the new digital age.

Sydney Nam

gates_foundationThrough innovation and funding, Kenyan bitcoin startup Bitsoko promises to revamp the way commerce is conducted in bustling markets in Nairobi and cities across Africa. The company has invented a digital wallet that employs blockchain technology to allow a smoother, cheaper transfer of funds between individuals.

Used in Bitcoin, blockchain technology saves and encrypts transaction records that allow for safe, speedy monetary transactions at a low cost.

This form of technology expands access to financial services for merchants and their customers. For sellers, such programming allows them to view and track customer payments while aggregating this data to produce complete financial and stock records, customer invoices and receipts, financial statements, and tax returns.

The acceleration of blockchain technology will also make transferring funds between individuals cheaper, encouraging mobile commerce.

Developments such as this will provide an alternative to inconvenient, slow transactions using cash or credit cards and will follow at the heels of the economic boom occurring in Africa. Such technology will foster economic growth and pair customers with suitable goods and services in a more efficient way.

According to Allan Juma, co-founder of Bitsoko, the brand hopes to be a leader in mobile finances, noting how “the financial structure in Kenya and throughout Africa has changed rapidly since the birth of mobile money by M-Pesa. We believe that this will only continue to grow”.

The company has recently attracted attention from international investors and organizations as well. It was recently awarded $100,000 from the Bill and Melinda Gates Foundation through the Global Challenges Explorations, an initiative providing support to groups working toward solutions to global problems.

Programs such as this one provide an incentive for entrepreneurs who have experienced societal challenges to develop efficient, sustainable strategies for improvement.

With its GCE funding, Bitsoko plans on expanding its access internationally, bringing mobile banking services to Ghana, Zimbabwe, and Sierra Leone in a project co-founder Daniel Bloch has named “Enable Universal Acceptance of Mobile Money Payments”.

Bringing this technology to new countries will spur economic growth and technological innovation that has been heating up Africa in recent years. With increased transactional accessibility, sellers can expect to create a larger, more diverse consumer base and enhanced output.

Partnerships between international organizations such as the Gates Foundation and local businesses can lead to far-reaching global solutions that empower entrepreneurs and their communities.

Jenny Wheeler

Sources: Disrupt Africa, Grand Challenges in Global Health, Bitsoko
Photo: Coin Telegraph

blockchain
Satoshi Nakamoto was the pseudonym under which a person or persons released the invention of the Bitcoin, and more importantly, the Blockchain. Bitcoin has proved to be influential and has a fervent user-base that believes it holds the keys to upending the banking and finance world through decentralized cryptocurrency. The power behind Bitcoin, however, lies with the Blockchain. And the power of the Blockchain has the potential to spawn new technologies and help the poor.

The Blockchain technology developed by “Satoshi Nakamoto” has been hailed as a practical solution to the “Byzantine General’s Problem.” It does not completely solve the Byzantine General’s Problem, but it does enough to bypass the issue to the extent that it should pose no issue in reality. The Byzantine General’s Problem proposes the flaw of sharing information between, say, two Generals. If one wants to tell the other to “attack point A,” he or she may send a message, but then he will never be sure if the other General got the message. The Blockchain is important because it solves the problem of “double spending” by providing a practical solution to the Byzantine General’s Problem. This means that there is no risk of a Bitcoin being spent twice, which would be similar to counterfeiting money. The Blockchain does this by creating a public ledger that records every transaction that ever took place with Bitcoin. Essentially, the Blockchain enables trust without the need for identity.

Blockchain technology could be used in wide-ranging applications. For example, NASDAQ recently announced that it will be testing Blockchain technology to record transactions of share trades for privately-held companies. Brian Singer explained in an interview with Forbes that he believes that Bitcoin and the Blockchain can substantially reduce poverty around the globe. Singer argues that the ability to have undeniable, transparent ownership of something that everyone can trust is imperative. Ownership of, say, a Bitcoin is ownership overvalue. This undeniable ownership of value that is recognized in a system no matter what anyone says is what causes Singer to believe that the Blockchain technology behind Bitcoin can have a profound impact on the poor. Bitcoin has already caused disruption in the remittance business; immigrants have been using Bitcoin to send money back home. Bitcoin does not demand costly extra fees like Western Union.

The Blockchain also removes the need for a third party, such as a computer server. One purpose of a bank is to store value safely and efficiently and also manage exchanges of value at high rates using credit card and debit card systems, which are centralized. The Blockchain can safely and effectively protect your value from “double spending” and digital theft – only by mistake of the user can it be stolen – and at the same time avoid the pesky fees and rules that banks impose.

Because of the Blockchain’s ability to essentially create trust without identity in a system, it lends itself to secondary innovations such as being used for other distributed systems that are without a central point, such as one server that contains all necessary information. Although distributed systems are not new, the Blockchain could help facilitate the creation of even more. These systems are in many ways more powerful than a centralized system. They rely on much less digital and physical infrastructure, such as a server run by a third party. These systems can run independently of authority. Distributed systems of all sorts have many advantages that lend themselves to the poor. By curtailing the need for a trusted authority or more infrastructures, it makes it easier for the poor to use and access these technologies from their respective countries and makes them more reliable.

It is possible that new innovations will emerge that are of particular use to the poor, as seen when people use the Blockchain and Bitcoin to bypass traditional remittance markets. The possibilities are endless; new companies are popping up and attempting to leverage this new technology. Like the Internet or other technologies, it can be difficult at first to see where the end of the tunnel leads, and the Blockchain may be no different. With smartphones becoming more and more common even amongst the poor, innovations on the Blockchain may hold hidden solutions.

– Martin Yim

Sources: Brookings, Marketplace, Forbes, The Guardian
Photo: The Cointelegraph

bitcoin
As mobile banking rises in Africa, with it comes the cryptic currency known as Bitcoin. The electronic currency will, if all goes as planned, make a huge impact on the African economy. Indeed, economists suggest that Africa will be well on its way to a normalized economy.

First, a short background on Bitcoin.

Bitcoin is a digital currency that was first introduced in 2009 by an unknown person who uses the pseudonym Satoshi Nakamoto. The currency is notable in that it operates without use of a central bank and uses peer-to-peer payment, which means money can be transferred anonymously. While the bitcoin has no fees for online payments, it is also not backed by any material goods.

As it turns out, this type of currency might have a strong foothold in Africa. Around 80 percent of adults in Africa have no bank account, but at least 15 percent have financial apps on mobile devices.  This money is often charged a 12 percent interest rate by Western Union or other services that wire currency. This ends up being close to 50 billion USD yearly.

On the whole, though, the African continent has been lukewarm about accepting the virtual currency and proponents must pass a number of hurdles before it is widespread.

The first problem that Bitcoin faces is in acquiring the currency. The coins are “mined” online via a complex computer algorithm. Many areas in Africa do not have sufficient technology to mine the currency and will therefore rely on other countries to sell them coins. This creates an unfortunate dependency that the continent seeks to eliminate.

The anonymity of Bitcoin also faces concerns on the continent. Africa has anti-money laundering and cash security programs that the electronic currency would have to pass in order to work on a widespread level.

But there are additional positive benefits, as well. As a complementary currency, it could solve some problems related to inflation. This is because there are a finite number of Bitcoins that will ever exist—21 million. Inflation should have no effect, theoretically, although there has been massive speculation since July 2013, causing prices to skyrocket. This could solve problems in countries like Zimbabwe, where inflation has crippled their economy.

If Africa can figure out how to incorporate the currency while still maintaining good relationships between business and government, it could be a massive boon.

Andrew Rywak

Sources: USA Today, The Economist, CNN
Photo: Technology Review

bitcoin
Officials across the nation are expressing concern over the latest technology on the internet: virtual currency.

Bitcoins are the one of the most common recognized digital currencies available on the web today. Disguised behind encrypted computer programs, the coins are becoming harder to find since their introduction in 2008. Once a user discovers a coin, they are able to store it in an online account.

The currency and any individual using it are untraceable and are garnering attention from authorities worldwide. Users of the currency remain anonymous through the use of identification numbers. Once a user knows the identification of another user, funds may be transferred to the receiver’s digital “wallet.” There are currently no restrictions on the types of products that may be purchased.

Investigations over the past few weeks have revealed the use of the currency to obtain illegal items including guns and drugs. But representatives of the Bitcoin Foundation argue that the currency is also being used for good.

The foundation currently operates as a self-governing institution that has been declared impenetrable by its creators. They maintain that the organization was founded in order to provide individuals with the ability to utilize their finances away from political oversight and other forms of outside influence.

Despite recent focus on illegal transactions using the currency, Bitcoins are also used for everyday purchases such as plane tickets and groceries. Currently, each coin is worth an estimated $1000 and is accepted at over 200 online retailers. Despite their worth, the number of coins available is severally limited.

Only 21 million coins were created and nearly 11 million have been found so far. If the remaining 10 million coins are found and retain a worth of at least $1000, then at least $10 billion of free money continues to await discovery. The potential impact on world poverty is startling.

The remaining Bitcoins could provide nearly 90 percent of UNICEF’s yearly budget ($11.7 billion.) It could cover the costs of both the World Food Programme ($4 billion) and the United Nation’s Development Programme ($5 billion.)

At its current rate, a third of the $30 billion annual windfall to end world hunger could also be paid.

– Jasmine D. Smith

Sources: ABC News, Huffington Post, Bitcoin Foundation

Bitcoin has recently been a hot topic of discussion for many popular radio and television programs—including NPR’s Planet Money and The Colbert Report. Now the question is, what exactly is Bitcoin?

The U.S. has the dollar, Mexico has the peso, the United Kingdom has the pound. The creators of Bitcoin wanted to invent a currency that was not tied to any country or government. Bitcoin acts as cash for the online universe that can be transferred to anyone, anywhere in the world.

The online currency, that began as a mere hobby for tech entrepreneurs and pioneers of finance, has landed in Kenya. The Bitcoin transfer service will be an addition to M-Pesa, the country’s highly successful mobile banking platform. The service, called Kipochi—Swahili for “purse”—will allow Kenyans to transfer money abroad while avoiding the large transaction fees of companies like Western Union and MoneyGram.

Kipochi describes itself as a faster, easier, and cheaper way to transfer money, compared to banks and money transferring services. All that is required for users to sign up is an email address, phone number, and passport or national identity number. Users can currently transfer one bitcoin a day—the exchange rate is currently 99 USD=1 BTC. However, the transfer amount is expected to increase overtime.

M-Pesa is a system many Kenyans already use to transfer money by text message within the country. Kimpochi will link to this system and allow Kenyans to send and receive Bitcoin internationally, converting it to and from an M-Pesa balance. Since Bitcoin only charges $0.04 per transfer, exchanging money will be made cheaper and more affordable to Kenyans.

In a country where 70% of the population does not have a bank account but does have a mobile phone, it makes sense that a non-governmental, cashless system like M-Pesa, and potentially Bitcoin, will thrive.

– Scarlet Shelton

Sources: All Africa, Wired, NPR, Mashable