HRF’s Weekly Financial Freedom Report #10

The Financial Freedom Report is a newsletter focusing on the role currency and banking play in the civil liberties and human rights struggles of those living under authoritarian regimes. We also spotlight new tools and applications that can help individuals protect their financial freedom.

Welcome back, readers!

This week we continue to witness Chinese citizens using creative new methods to use bitcoin, Burmese citizens suffering from a post-coup economic crisis, and severe currency devaluation in Nigeria and Egypt, the largest countries in Africa and in the Arab world.

Plus, an eye-opening discussion on how Bitcoin mining operations in Africa are moving towards decentralized, off-grid locations, helping decentralize mining globally.

There’s a lot to go over, so let’s get started.

China | More Citizens Turning to Bitcoin 

Amid a declining economy, Chinese citizens are increasingly turning to bitcoin. According to a new report from Reuters, citizens are using overseas bank accounts to buy crypto assets and using their $50,000 annual forex purchase quotas to move from RMB into Bitcoin and other digital currencies. Despite the Chinese Communist Party explicitly banning bitcoin trading and mining, citizens are finding a way to use Satoshi Nakamoto’s invention. With deflation in the headlines and the International Monetary Fund (IMF) predicting a further reduction in Chinese GDP growth to 3.5% in 2028 (from 5.4% in 2023), it will be interesting to follow Bitcoin trends in China as local investments such as real estate and stocks falter.

Nigeria & Egypt | Currency Devaluation

Energy and Commodities Columnist at Bloomberg, Javier Blas, says the two largest economies in Africa — Nigeria and Egypt — are under “huge financial strain.” Last week, the Nigerian government executed a 30% devaluation of the naira (the second currency devaluation of 30% in less than a year), and the Central Bank of Nigeria (CBN) announced limits on how much banks can hold in foreign currencies. Similarly, the Egyptian pound is facing pressure to devalue, with its black market rate indicating a staggering 50% decrease in value. In 2023, the average monthly salary in Nigeria was 71,185 Naira ($155), and in Egypt it was E£4,000-6,000 pounds ($130-200), which means that a combined 322 million people are experiencing a drastic reduction in their purchasing power. It’s important to note that these types of economic policies are not agreed on in any sort of democratic fashion and are instead imposed upon tens of millions of people.

Bolivia | Roadblocks Impact the Economy

Two weeks of roadblocks in Bolivia are impacting major economic cities like La Paz, Cochabamba, and Santa Cruz. This is causing food, fuel, and medicine shortages, as well as hiking up prices in a country already suffering from high levels of poverty and income disparity. Since the roadblocks began, Bolivia has suffered economic losses estimated at $600 million. The roadblocks made of stones, logs, and piles of dirt have been staged by supporters of former President Evo Morales in response to his disqualification from the 2025 elections. In November 2023, Bolivia’s Constitutional Court disqualified Morales from running for president after serving three terms in violation of constitutional term limits (two terms). Morales’ supporters, as well as other political parties in Bolivia, are demanding the resignation of all current judicial courts and are using roadblocks to pressure for change. This crisis further highlights the authoritarian nature of the Bolivian government.

Burma | Post-Coup Economic Crisis

Since the 2021 military coup, the 55 million residents of Burma have struggled with soaring prices on essential goods. Rice and edible palm oil, considered staple ingredients in every Burmese kitchen, have seen significant spikes in cost as the local currency has collapsed and the regime prints deficits to finance a war against dissents. The price of low-quality rice has jumped 220%, while edible palm oil nearly doubled in price over the last three years. Gasoline prices skyrocketed to 520% as importers have been unable to pay in dollars, leading to delays in unloading fuel tankers in major cities. In the post-coup economic crisis, citizens have been turning to gold, which has seen a price increase of 190%. In times of political and economic crisis, citizens are increasingly seeking refuge in hard assets, and the democratic opposition has promoted bitcoin and stablecoins as alternatives to the regime’s controlled banking system.

Zambia | Debt Restructuring

Zambia’s finance minister refrained from giving a timeline for a debt restructuring deal with private creditors, even as the IMF is pressuring all parties to find a middle ground. Zambia was the first African country to default on its sovereign debt in late 2020, and its ongoing attempts to restructure its debt have been met with delays, especially from Chinese lenders. As Zambia grapples with loan repayments, the government is also researching central bank digital currencies in an effort to get a tighter grip on economic activity. In parallel, two young entrepreneurs called Tilo and Tamara are attempting to stimulate a local circular bitcoin economy by creating a women-focused educational community called “Bitcoin Banamayo.”

Machankura | Bitcoin Java Cards  

In his recent Forbes article, Nigerian Bitcoin developer and venture capitalist Abubakar Nur Khalil dives into a groundbreaking new project turning feature phones without data into Bitcoin self-custodial devices. Machankura is a project pioneered by the South African entrepreneur Kgothatso Ngako that allows individuals with phones without Internet connectivity to send, receive, save, and use bitcoin. The app is planning to leverage Java Cards (a software that allows applets to run on Smart Cards) in order to store private keys on a SIM card, offering a way for people without Internet to self-custody bitcoin.

Wallet Testing | Lightning Wallet Usability in Zimbabwe
Bitcoin author and educator Anita Posch carried out a test of self-custodial Lightning wallets in a rural area of Zimbabwe to determine which wallets work and which do not. With the existing self-custodial wallets being developed overwhelmingly outside Africa, these solutions are rarely, if ever, tested in areas without strong connectivity. In her article, Posch reviews Bitcoin wallets Blixt, Green, Mutiny, Phoenix, and Zeus and releases the results of her self-custody Lightning wallet test. She focuses on the best wallets for everyday users who want to send small payments. Phoenix and Mutiny top her list of best-performing apps and might be handy tools for activists working inside dictatorships like Zimbabwe.

Cashu–Address | LNURL Service  

Lightning Address is a popular way to send and receive Bitcoin payments, but the overwhelming amount of usage is custodial. To address this issue, researchers have developed Cashu–Address and an accompanying LNURL service that generates eCash tokens for received payments, holding on to them for a user until they connect back online. There are several advantages to this when compared to the standard custodial Lightning addresses. Among them is the fact that financial activities remain private from custodians and that custodians cannot selectively censor individuals. “Received payments will be locked to your public key, making Cashu-Address a forward-thinking choice in the world of custodial Lightning,” according to Egge, one of the developers. Cashu-Address combines the strengths of Lightning and eCash to provide more privacy, something that could be useful for vulnerable populations under authoritarian regimes.

Merged PR | Net Enable v2transport by Default 

Version 2 (v2) P2P transport — a proposal that allows Bitcoin nodes to communicate with each other over encrypted connections — was merged last week by Pieter Wuille. With this new merger, mass surveillance and analysis of bitcoin users is much harder to achieve, helping improve user privacy. This proposal replaces an earlier BIP151 proposal and features additional changes to the communication protocol, such as “allowing frequently used protocol commands to be aliased to shorted byte sequences to reduce bandwidth,” as described by the Bitcoin Optech newsletter (a resource that HRF recommends subscribing to).

Nostr | Adoption Grows in Brazil 

According to Nostr creator fiatjaf, Nostr is being organically discovered and slowly adopted by  Brazilian personalities with large numbers of followers, as they cite the dangers of centralized media.” Nostr is a decentralized and open social network protocol that focuses on censorship-resistant communication, a significant shift away from traditional social media platforms. The growth in users emphasizes the desire for such protocols in a country like Brazil, which although democratic, has struggled with press freedom issues and potentially portends more usage of Nostr in countries with actual authoritarian regimes.

Vinteum | New Physical Space Opens

Lucas Ferreira, the executive director at Vinteum, announced that the nonprofit now has a physical space called Casa21 for the Brazilian Bitcoin community. Vinteum is a Bitcoin research and development center dedicated to supporting open-source developers in Brazil and the wider Latin America region. By having a physical space, engineers, designers, entrepreneurs, and activists will be able to discuss regional challenges, brainstorm solutions, troubleshoot experiments, and help drive adoption on the continent. The timing of this new space is critical as the Brazilian government continues to discredit bitcoin and launches a pilot project of the “DREX” central bank digital currency. As a supporter of Vinteum, HRF congratulates them on the opening of this much-needed space.

Citrea | A Bitcoin ZK Rollup

Citrea, a new bitcoin scaling solution that claims to bring smart contract functionality to Bitcoin without any forks, launched its internal devnet. The team explains that “Citrea is a massive change to the Bitcoin ecosystem by allowing a massive increase in transaction throughput on Bitcoin as well as full EVM compatibility.” HRF is hopeful about new innovations that can ultimately allow Bitcoin to scale to hundreds of millions of self-custodial users, but also notes skepticism about Citrea’s claims. As an example, Supertestnet writes that “announcements like this, without proof of work, are a big red flag.” To learn more about zk-rollups, you can read HRF Fellow John Light’s report, “Validity Rollups on Bitcoin.”

Bitcoin Saves Wasted Energy in Africa and Beyond

In this hour-long X Spaces discussion, HRF’s chief strategy officer, Alex Gladstein, explores how the Bitcoin network can buy otherwise wasted or orphaned energy, giving more people access to electricity and basic freedoms in East Africa. He also points out that as Bitcoin mining moves towards off-grid locations, taking advantage of cheap hydro and geothermal power in places like the Rift Valley, the network itself becomes more decentralized and resistant to government control, making it a better tool for the opponents of authoritarianism. This mining decentralization trend is expected to continue, with a projected 20-30% of the Bitcoin network operating off the grid in the next 10-20 years, making coordinated shutdowns increasingly challenging. Gladstein is joined by Kgothatso Ngako, Femi Longe, Marcel Lorraine, Erik Hersman, and Troy Cross to unpack these observations.

Oslo Freedom Forum | Reserve Your Spot

Human rights advocates from around the globe will take the Oslo Konserthus stage on June 3-5, 2024, to share their efforts to defy repression and speak out against injustice. This year’s theme, Reclaim Democracy, emphasizes the pivotal role every individual plays within the global movement for democracy. The Financial Freedom team is looking forward to creating a program track exploring the role open-source money plays in preserving our human rights and civil liberties. Use the code 2024OFF to get an early bird discount on your ticket.

Until next time,

Ayelen Osorio

Financial Freedom Specialist

Connect on X and LinkedIn

Support the newsletter by donating bitcoin to HRF’s Financial Freedom program via BTCPay.

Want to contribute to the newsletter? Submit tips, stories, news, and ideas by emailing [email protected].

The Bitcoin Development Fund is accepting grant proposals on an ongoing basis. The Bitcoin Development Fund is looking to support Bitcoin developers, community builders, and educators. Submit proposals here.