Will Zimbocash Succeed | Terence Zimwara
Zimbabwe’s crypto community got lit up when it was reported that Zimbocash, a local cryptocurrency outfit had its token listed on Bithumb, a cryptocurrency exchange based in South Korea.
By the morning of the 25th May the Zimbocash token, also known as Zash, had a market capitalization of $395 000 and tokens worth $93 400 were traded at an average price of $0.0032. That is not bad for tokens that were issued for mostly free. Maximum supply has been capped at 4.5 billion coins.
For the Zimbocash community, this milestone is a significant one because it has been reached without going through an initial coin offering (ICO) or an initial exchange offering (IEO) route. Usually, a token offering precedes a listing after which token/coin holders can start trading.
Meanwhile, the buzz created by this listing seems a vindication of some sorts for Zimbocash. Zimbocash has had to put up with ignorant and sceptical public, regulators that are not yet clued in with digital currencies and of course, the naysayers.
Crypto community not amused
Yet, despite this win on an international stage, it seems the mood within the Zimbabwean crypto community is quite different. Judging from the lively discussions that that ensued following the listing, it appears Zimbocash still has a lot it needs to say before the coin is embraced by the wider crypto community.
In some crypto chat groups on Telegram and Whatsapp where crypto community conduct trades and discussions, members take turns to cast doubts about the Zash prospects and Zimbocash is doing well to respond. However, it seems not everyone is satisfied with the answers.
Those that are not so sanguine about the Zash token following this listing point to the elephant in the room, the ban on cryptocurrency trading. Zimbabwean regulators have not exactly given a thumbs up to any private cryptocurrency project while the ban itself remains in force. It is this ban that caused the shutting down of Golix, a cryptocurrency exchange business in 2018.
Given this background, it is then bewildering that Zimbocash has been allowed to go as far as to list a token on an international exchange despite hailing from a country that has a ban on cryptocurrency trading remains in place. The Zash listing does raise questions about Bithump or its listing rules, especially when one realizes it has a reputation for pursuing a conservative approach to listing of new coins.
Some sceptics also allude to the fact that Bithumb, which touts itself as one of the largest cryptocurrency exchange in the world, actually got hacked in 2017 and 31000 clients’ accounts were compromised. At the time, Bithumb pledged to reimburse affected clients.
The lingering effects of the RBZ ban
Meanwhile, blockchain and cryptocurrency start-ups have avoided investing or setting base in Zimbabwe due to RBZ ban.
Many firms in this space are interested in doing business in Zimbabwe because conditions there are considered to be most ideal for the use of decentralised cryptocurrencies. So while the last two monetary policy statements have suggested the RBZ has had a change of heart, nothing short of a total reversal of the ban will persuade foreign companies to start trooping in.
Zimbocash has to convince sceptics why it has had it easy where others see a toxic regulatory framework. So how can Zimbocash do this?
Well, the first port of call would be to engage critics in their various platforms as Philip Haslam, head of Zimbocash Communications, has been doing. Earlier in the week, Haslam issued a statement—which circulated in many social media chat groups— wherein he sought to make clarifications or set the record straight.
In the statement seen by this writer, Zimbocash reiterates that it is a decentralized but privately owned entity that is out to create sound money to ‘save Zimbabwe from economic ruin and collapse caused by rampant money printing.’
It is a bold statement that can easily be misconstrued to mean something else or one which runs counter to some of the earlier statements that key Zimbocash personnel have made before the listing.
For instance, in written responses to questions sent, Zimbocash Co-Founder and Head of the subscriber network, Laswet Savadye tells AfricaBlockchainMedia that they are not seeking to replace the government’s fiat currency. Instead, Zimbocash envisions Zash working side by side with the volatile Zimbabwean dollar.
So while Savadye was careful not to sound like Zimbocash is out to usurp RBZ’s role, Haslam appears to be saying something completely different, probably to a different audience. Things get more awkward when Zimbocash’s non-resident Ambassadors like Tron blockchain supporter Mike Mcarthy, posts on Twitter stating that Zimbabweans can now actually use Zash to pay for goods and services. Mcarthy, who appears to shill the Zash coin, clearly states the Zash token aims to become the national currency of Zimbabwe!
Critics are pointing to this ‘subterfuge’ as evidence of Zimbocash’s lack of transparency. Others are pumping the token while others are doing damage control!
Zimbocash needs to be transparent with what it is doing and it may now have to answer many uncomfortable questions as a result of perceptions created by these conflicting statements. For instance, Zimbocash has to respond to the following questions: What does saving Zimbabweans from economic ruin really mean if this does not entail elbowing out the existing government-issued currency? Who gave Zimbocash the mandate to come and specifically save Zimbabweans? From the ‘conversations’ that Zimbocash has had with the government, what exactly was green-lighted and what was not?
At the moment, crypto start-ups have two choices, either they clearly state from the onset they are anti-government like Bitcoin or Monero or they will subject themselves to regulations no matter how arbitrary or vague these maybe. There is no midway!
When one understands this then they can appreciate how statements like those attributed to Haslam or McCarthy can only invite a negative response from crypto stakeholders or the Zimbabwean government itself.
A hard-line government response?
Already, there are reports that some unnamed officials in the Ministry of Finance have set tough conditions that Zimbocash must adhere to if it wants Zash to be given a thumbs up.
Some of the items on this government wish list include the following:
- Surrendering the entire database to the ministry of finance for ‘regulations’.
- Zimbocash must be able to track, trace and identify the users, spending record of users and physical address of users.
- Zimbocash must be able to ban or block accounts that transact in unauthorized activities or goods using their system.
- All financial transactions must be submitted to the government ministry of finance of monitoring.
- Finally, the government wants all transactions to be reversible but if they cannot be reversed then Zimbocash is expected by the government to block, ban or freeze user accounts that are engaging in suspicious activities.
Of course, some of the requirements only expose the ignorance of those making them. However, such requirements (if they are true) probably means Zimbocash’s many conversations with authorities have not succeeded in bridging the knowledge gap. It may have been this knowledge gap that caused RBZ to shut down Golix and to issue a public notice advising against use of cryptocurrencies.
It has to be noted that there is no way Zimbocash can meet such conditions or requirements because some of these are the very antithesis of what a decentralized blockchain is all about.
Perhaps another issue causing much consternation has to be a know your customer (KYC) regime that Zimbocash has imposed on some token holders.
Zimbocash says the entire use-case of its model is based on the start-up being able to validly allocate tokens to Zimbabweans. Without the ability to identify and verify, the entire business case falls with spam accounts and hackers.
On the other hand, early Zimbabwean subscribers of the Zash token are alleging this unfair profiling based on one’s nationality was previously not communicated. There is no KYC requirement for non-Zimbabwean buyers of the token yet the same is now being demanded of Zimbabwean citizens.
As one anonymous Zimbabwean token holder puts it, his fellow countrymen are being treated unfairly just because they signed up and received free tokens.
It is this discrimination that has irked some Zimbabwean token holders who are now labelling the Zimbocash a scam!
Zimbocash needs to do more
From the look of it, Zimbocash might have to conserve most of its energy towards the task of convincing ordinary users and merchants to adopt Zash. This is because the listing excitement has not cascaded down to the ordinary person on the street. The average Zimbabwean is not aware of this option that they can use to insulate themselves against inflation.
Furthermore, usual challenges like internet access or data cost will have bearing on the long term success unless Zimbocash comes up with a unique plan.
For now, however, it seems there are far more pressing issues that Zimbocash has to deal with before attempting anything else.
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