CRYPTO – THE LOWDOWN FROM THE ORACLE OF AFRICA

“The hardest lesson is how to take a long-term view and just hold. You can take a position in a cryptocurrency and you can say look in five, or ten, years’ time this will be good investment. I’m going to make it right now and you could be wrong on timing and make an investment too high, but in five years’ time you may still be right. But when everything goes down and nobody else believes that is when to sell and take massive losses and unless you are a trader, I think people should just buy their crypto and it should be something they invest in and hold. But the number one lesson is do not put money in you can’t afford to lose and once you put it in don’t take it out – just leave it. Because if you put it in there and you can afford to lose it – why worry about taking it out? You have got to take a long-term view on crypto.”

Long term was the thinking when Lingham grew up to the gentle crash of waves of the Indian Ocean under the far from gentle apartheid regime of South Africa. As a person of colour, he was considered a second-class-citizen by the system in the violent 1908s.

“For the first 12 years of my life…I spent a lot of time reading, I spent most of my time reading because there was nothing else to do because we were not allowed to go to public spaces. The apartheid era was a pretty dangerous time as well and my parents were very protective of us for good reasons…When Mandela was released from prison and everything opened up and the world changed, I had kind of a different view on the world,” he recalls.

“If I don’t use this opportunity to apply what I have learned and do something cool with my life -it is a waste. I have always had a fear of wasting my life syndrome, I wanted to do something good.”

It started with study at the University of Cape Town followed by a few years working in Johannesburg.

“I tell everyone it takes 20 years to become an overnight success!”

As Lingham worked his way up, the lure of the United States was strong.

“During that period, I was exposed to Silicon Valley. Just by trying very hard I managed to get into the US and I have a business here and have been based here ever since.”

“My dream as a child growing up was to move to California. I always loved watching movies on California Highway Patrol and LA Law and I was always enamoured with America, with California really.”

So, Silicon Valley it was and when he got to California there was little time for dreaming.

“Silicon Valley started off as being a Mecca for all the entrepreneurs. You have got to wind back the clock 20 years, entrepreneurs, tech entrepreneurs, the stuff wasn’t cool. It was very geeky and techy. In the late 1990s, the tech bubble collapsed and no one believed in it…For the ones who made a pilgrimage to Silicon Valley to trying to build a tech company got laughed at and mocked by all the big companies; twenty years ago, of the top ten companies in the world – none of them were tech companies, now pretty much all of them are tech companies,” he says.

“So, you have to be cut from different cloth you had to be a contrarian, you had to be the “think different” kind of person that Steve Jobs spoke about- you had to be one of those.”

But as time went on the allure of Silicon Valley to tech entrepreneurs like Lingham faded. He moved to San Diego – a port a little similar to Cape Town – where he runs his business.

“I think a lot has changed over the past five years. Silicon Valley looks more like corporate America that is why I left more than two years ago…The ethos of Silicon Valley is more decentralized around the world now. If you look at where the entrepreneurs are going it is: Portugal; Miami its Austin, it’s not Silicon Valley any more. Silicon Valley will continue to be the birthplace of tech – Apple is still there Google is still there- but basically it is still full of employees…it is not the start-up culture it used to be; global entrepreneurs are able to start up anywhere they want to be. It is not an entrepreneur climate; it is more of a corporate climate.”

Lingham worked his way up as an entrepreneur with alacrity. He co-founded a company called Gyft – a digital gift card platform – by raising $5 million, in 2012. He sold it, two years later, to First Data Corporation for $54 million. As an investor has a reputation for shrewdness when it comes to raising finance.

“I always recommend that if you have a unique idea convince a co-founder I always like to see a business co-founder and a technical co-founder together. One of the founders has to be willing to build the tech ground up and the other one willing to build the business. I have an adventure capital firm in South Africa called Newtown Partners we fund entrepreneurs on the ground in South Africa and the rest of the world and have done a dozen deals in the past two years if not more. We have a certain formula we look for like entrepreneur teams like two or three people I do not invest in four as a founding team like you can have four people in a team but you have to have like two or three founders,” he says.    

When it comes to cryptocurrency, Lingham has skin in the game. He began investing in it, in 2013, in the early days of cryptocurrency when there were few angel investors writing cheques.

Lingham launched his own cryptocurrency, the CIVIC, named after the company he founded, in 2015, a blockchain start-up offering decentralized identity verification. The company helps customers protect and assert their personal identity to prevent fraud. The CIVIC raised $33 million in a public sale more than week before it launched, in 2017. 

“The token is still alive and functioning there is an entire ecosystem built around identity.com which is the marketplace for identity and that runs on CVC tokens and we have a number of partners that use it and we are continuing to build on that with civic this stuff takes a long time to build, building crypto and blockchain is a very slow process because of the security risks and issues and we are just continuing to develop that,” he says.

What are the security risks associated with cryptocurrency?

“They are extremely difficult because if you make one mistake you can blow up the whole project and the cost of failure is extremely high and so you have to be extra careful. The industry is still trying to find out which solutions are going to scale and which should be adopted,” says Lingham.

“We have a small bubble in bitcoin and it has cooled off a bit and that’s fine, but imagine we had a bigger bubble and bitcoin went up to $200,000 and crashed down to 20 or 30 thousand and wiped-out trillions of GDP in wealth? The question is how much damage must the volatility of the cryptocurrency markets do to the global economy for governments to step in and try to regulate it.”

Fraud is another criticism the critics throw at cryptocurrency.  Fraudsters send fake parcels; government letters and text messages try to get people to share their bank details or send money. The criminals then transfer the money to cryptocurrency wallets. Along with criticism of uncertainty and a lack of regulation, can cryptocurrency survive this kind of bad press?

“Well, it has so far. It started off with the users of drug money, porn peddlers and whatever else back in the early days and so was the internet, right, it was used for all that; but now you have listed companies, like Coinbase, which is worth $40 billion dollars, and massive institutions like Square and Tesla; these companies all-embracing crypto so I think it has gone past that point and it is kind of like saying the dollar bill, the dollar bill is probably the most used currency for money laundering and  paying for drugs and stuff,” he says.

Proponents of cryptocurrency question the credibility of cash, which they say is merely a note to promise to pay the bearer the equivalent of its value in gold. With most countries off the gold standard – where all paper money is backed up to the last cent by gold – this system is flimsy, they say.

Lingham believes, with cryptocurrency, you can’t fake a transfer because they are time stamped and processed by a million of computers and you would need to co-opt millions more computers to make a fraudulent transaction.

Yet Lingham, for all of his cryptocurrency optimism, feels it may take time for Africa to fully embrace it.

“You know, it is hard to say because I think there is there is a geo-political issue here. It is not the technology itself. The technology is working, its fine, it is how does it interplay with geo-politics. No one has got an answer to that right now…I don’t think anybody can give a firm answer right now. There is another pass forward, which is the China way which is China issuing their own central bank digital currency African governments may do the same, it is hard to say we might just need more time everyone gets excited, but these things change over a decade,” he says.

How long before, say, the Bank of Zambia issues its own cryptocurrency?

“I think there is probably going to be an African country that gets themselves into hot water in a year or two and post Covid and they will need to do something drastically different at which point they decide to issue their own currency, which is great, a digital currency. Lots of money would be lost on bets on when countries would adopt digital currency; in the last decade it has taken a long time so I wouldn’t have any guesses to say it would happen anytime soon.”

So, what would a young Lingham do if he were to have his time over again in the sleepy seaside town of East London would he move to the US?

“I don’t think it is necessary anymore; it is actually a bad idea -I think Africa is the final frontier on earth in terms of massive amounts of change to society; improving the lives of people, a billion people. I say the capital is there, stay where you are, the capital goes a lot further there than it does overseas and you can build distributor teams. I mean, I have invested in tons of companies that have teams in Africa that is why I would like to see people double down locally. I don’t think the biggest opportunities are in the US any more, physically – we are now living in a global market and investors are happy to invest worldwide,” he says.

‘I think there is benefit being in the major towns – I wouldn’t try and start a tech company in my home town it is kind of not the right place to be, you would have to go to Cape Town or Johannesburg. The same applies throughout Africa, if you are in Kenya and you are in a small town go to Nairobi, they have got infrastructure and good people and there are lots of entrepreneurs around. You don’t have to be in Silicon Valley, is my point, you don’t have to be half way ‘round the world. I would say there are diminishing returns going from Nairobi to San Francisco, or Cape Town to San Francisco versus going from East London to Cape Town.”

But in the future – if you want to be an entrepreneur in Africa – you are going to have to look at cryptocurrency, it is not going away.