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SMS Service Allows Bitcoin Transactions via Text

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Machankura, an SMS-based service named after the South African slang word for money, is bridging the gap between Bitcoin and people without internet access. Kgothatso Ngako, the developer of the app, has stated that thanks to this new technology, people in Africa are able to receive and spend Bitcoin without the need for an internet connection.

Ngako explains that with Machankura, users may dial any given number they wish. The user is then prompted with an option to either learn more about Bitcoin or register an account where they need to create a five digit pin. After all of this is done, the user is now able to send and receive Bitcoin.

Paco de la, a Bitcoin educator who is also known as @runwithbitcoin on Twitter, shows how Machankura works in his short video below:

Reasons for Creating Machankura

As described by Ngako, the main reason for creating Machankura was because 94% of financial transactions in Africa happen in USSD, the protocol used to send text messages, while the remaining 6% is made via mobile apps. Additionally, since he believes internet access is one of the biggest hurdles for populations in Africa, the decision to create an SMS-based solution for accepting and using Bitcoin was easy. 

He explained:

This year, a lot of conversations in the space were around USSD or making Bitcoin accessible on feature phones – this could be a part-time project – let me just set it up. And that’s basically how Machankura came to be.

Thanks to this innovation, wallets that are compatible with Lightning are now able to send Bitcoin via Lightning to phone numbers. The solution provided by Machankura has already gained interest from companies like Bitrefill, Azteco, and Paxful. Each of these platforms bring Bitcoin adoption to Africa through different means. The three companies are also working on ways to collaborate with one another.

What Are the Drawbacks?

However, this current solution also has its drawbacks. Ngako highlights that as of now the service is custodial, which is something that he wants to change by looking for ways to make SIM cards work as private keys. 

He also stated that regulators may take action against the innovation. Moreover, he also fears that since a centralized company offers these solutions, people will not be incentivized to learn how to properly use Bitcoin.

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