But new technologies such as crypto and web3 provide hope to Africans to play a massive role in defining what it looks like in years to come. Nestcoin, a company founded last November that builds, operates, and invests in web3 applications, wants to be pivotal in this transition and has raised $6.45 million pre-seed to that end.

Africa’s cryptocurrency market grew by 1,200% to $105.6 billion between July 2020 and June 2021, per research by New-York based research firm Chainalysis. Regional inflation, weak currencies, high unemployment rates, and economic uncertainty are a couple of reasons behind this growing adoption. With these issues not leaving Africa anytime soon, we should expect stronger crypto growth despite several governments’ efforts to stifle it.

Peer to peer transactions and retail trading are two of the biggest drivers of crypto adoption on the continent. Before starting Nestcoin, founders Yele Bademosi and Taiwo Orilogbon led the charge at Bundle Africa, one of the continent’s well-known crypto trading platforms.

Bademosi was the Director of Binance Labs in Africa, overseeing the incubation and development of blockchain projects when he decided to start Bundle as CEO in 2019. Orilogbon was the company’s chief technology officer.

With Bundle incubated within the ecosystem of the largest crypto exchange platform, Bademosi had lofty ambitions for the company. “The goal was to be present in 30-plus African countries and have millions of users,” he told TechCrunch in an interview. By the time he left, three years after, Bundle was only live in Nigeria and Ghana with less than 100,000 active users.

Bundle’s numbers might not seem impressive from a global standpoint. Still, it is when compared with its peers in Africa as no local crypto platform serving just Africa has reached a million customers.

Bademosi thinks this is because crypto trading alone cannot drive mass adoption of blockchain and crypto native applications. To create products that can scale to a million users or several million in the next couple of years, companies should build applications that are more accessible for the everyday person, which is the basics of web3.

“The first iteration of crypto products were trading products. The second iteration has been more around like decentralized finance and non-custodial trading of financing activities,” said Bademosi.

“The current situation of crypto, and now more like applications that everyday people use and love, whether it is like consumer applications, finance apps, entertainment, gaming, but these applications now have potential to reach millions of users across frontier markets. And that’s sort of what we are trying to do with Nestcoin.”

To understand how Nestcoin works is to look at the Digital Currency Group (DCG). The Connecticut-based venture capital and holding company has over 60 crypto and blockchain subsidiaries and investments across 30 countries, including LUNO, CoinDesk and Bitso.

However, the difference is that while DCG focuses on western markets and building products for HNIs and institutional clients with custodial features, Nestcoin primarily builds, invest, and operates web3 and non-custodial products that are more accessible for everyday people in frontier markets.

Nestcoin’s products cut across Decentralized Finance (DeFi), media, digital art and gaming. 

The company, which Bademosi describes as a venture collective, launched its media arm called Breach last year to create bite-sized and informative crypto content for the average African. It also set up Metaverse Magna (MVM), a gaming guild that introduces users to the world of play-to-earn crypto-powered games like Axie Infinity.

The NFT-based online video game developed by Sky Mavis has been a sensation since 2020 but is expensive to play. What MVM has done is to buy Axies and lend to players in its guild while employing a revenue-sharing agreement with them. In the end, these users can earn up to $1,000 monthly, the company said. 

Bademosi said MVM has had more than 2,000 applications since its launch. However, only 400 gamers are currently live on the platform, a number he’s looking to increase to 1,000 before next quarter (for context, some of the largest Guilds have a player size of around 2,000 to 3,000).

Nestcoin also hopes to introduce its DeFi projects by Q2 this year. In addition to that, the company will be exploring ways in which content creators on the platform can earn crypto while educating its 6,000 subscribers with structured learning paths.

The company’s pre-seed round, the second-largest in Africa and largest in Nigeria and sub-Saharan Africa right now, will provide it with the firepower to build these products and several others in its pipeline.

A part of the funds will also go into investing in web3 projects. The company has done so in a handful but the only publicly disclosed deal is in Lazerpay, which allows businesses to accept payments in crypto. It recently backed AltSchool Africa, an entry-level tech talent project introducing Africans to software engineering and web3 courses like blockchain.

Nestcoin has involved itself with other projects like collaborating with crypto-exchange platform Bitsika to launch a social token for Davido, an African music artiste. Bademosi said Nestcoin might raise an independent fund to invest and participate in such deals and projects going forward.

That said, there’s a growing concern that web3 is falling into similar pitfalls its enthusiasts blame web2 projects for. Asides from centralization, many think web3 projects such as NFTs are becoming expensive to participate in and enriches only a select few.

Bademosi disagrees. According to him, crypto trading, the most accessible form of web3, was accused of the same issues years ago but has become cheaper to use.

He referenced his time at Microtraction, an early-stage investment firm he founded in 2017 to back African startups. There, he invested in YC-backed Buycoins at a time when DCG-backed LUNO was the only company that made it easy for Africans to buy and sell bitcoin. But today, there’s a whole ecosystem of companies making it easier and cheaper to buy other cryptocurrencies, not just bitcoin, he said.

“A lot of these early companies in crypto trading didn’t have a lot of users. So the same way you don’t think of crypto trading as a luxury activity, that’s just because of the evolution of the last three to four years,” the chief executive continued.

He also pointed out the success of Axie Infinity in the Philippines, where thousands of gamers who couldn’t earn money with web2 games are doing so now. He said if Nestcoin can replicate something similar in Africa, a market with over 250 million mobile gamers, wealth will be distributed among millions of people and not a select few.

“There’s this saying talent is evenly distributed, but opportunity is not. Web3 and crypto is that equalizer between the distribution of talents and the distribution of opportunities,” he said. He expects to achieve three audacious goals with his new company: acquiring one million monthly transacting users, reaching up to 50 million monthly active users, and getting a million of these users to hold $10,000 in their wallets.

The company, with team members in nine countries, has onboarded strategic web3 and traditional investors to back its mission. They include Alameda Research, Distributed Global, Alter Global, Serena Ventures, A&T Capital, MSA Capital, 4DX Ventures, Raba Capital, Goat.vc, Old Fashion Research, CMT Digital, Electric Capital, Social Capital, CoinFund, gumi Cryptos Capital and DeFi Alliance. Local investors in the round include Ventures Platform, Future Africa and Voltron Capital.