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Bitcoin in Zimbabwe: Are Zimbabweans Really Embracing Cryptocurrencies?

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Bitcoin in Zimbabwe

If you read crypto media, you may be under the impression that bitcoin plays a major role in helping cash-strapped Zimbabweans. The “bitcoin is saving Zimbabwe” story may sell but the reality of cryptocurrency adoption in the Southern African nation is quite different. In this article, you will discover the real story of bitcoin in Zimbabwe told by a local journalist.

Zimbabwe Today

Zimbabwe’s deteriorating socio-political environment is widely blamed on the mismanagement of the country’s failing fiat currency and the standoff between the country’s main political parties. Since the August 2018 disputed elections, the country has witnessed a number of demonstrations that turned violent resulting in the destruction of property and loss of lives.

Introduced in 2016, the Zimdollar – which briefly traded at par with the USD – has depreciated by as much as 900 percent leading to an inevitable spike in inflation and the subsequent social unrest. While the government has suspended the announcement of inflation figures, John Hopkins University’s applied economics professor, Steve Hanke, currently estimates it to be 558 percent.

To compound matters for Zimbabweans, the government has since introduced different regulations that have essentially curtailed the use of foreign currency as a hedge against inflation. Zimbabwe has had a dollarised economy since 2009 but this was discontinued in June 2019 when a statutory instrument made it illegal to conduct local transactions in USD.

With the USD option now seemingly closed, Zimbabweans are now seeking other alternatives that shield earnings and savings from hyperinflation. Bitcoin would be such an option.

Bitcoin in Zimbabwe

bitcoinIn fact, to many people outside Zimbabwe, the aforementioned conditions make it seem logical for Zimbabweans to switch to bitcoin and cryptocurrencies in general. So, have they embraced cryptocurrencies?

Indeed, local bitcoin trading has been growing but it is the extent of this growth that remains far from what some would expect.

Despite this narrative being overhyped by the global media, bitcoin use in Zimbabwe remains insignificant. The reasons for this lack of enthusiasm range from the usual challenges like price volatility, regulatory uncertainty as well as country-specific ones like the lack of reliable exchanges, ignorance, and limited internet access.

Cryptocurrencies are borderless and thus not subject to Zimbabwe’s stringent foreign exchange controls. Yet, the technology remains relatively a novel one to ordinary Zimbabweans. Few see it as a solution to the country’s long-running fiat currency troubles.

While there might be a general consensus when it comes to identifying the genesis of the country’s fiat currency troubles, the ensuing debate suggests that decentralised cryptocurrencies are not (yet) seen as a viable alternative.

Some economic experts including one of Zimbabwe’s most successful finance minister, Tendai Biti, believes the adoption of the South African rand as the best solution to attack the country’s currency problems. Cryptocurrency is generally seen as a far-fetched solution. Although, the current finance minister, Mthuli Ncube did talk up its potential soon after being appointed to the job. 

Lack of Peer-to-Peer Exchanges Presence

It would seem that only a few Zimbabweans are aware that it was Golix, a crypto exchange, which briefly brought this crypto alternative to the country. Golix (previously known as Bitfinance) opened its doors to provide a bitcoin trading platform for local users. In early 2018, Golix stated that it has grown its userbase to over 50,000 and had experienced $20 million in transaction volume in the three years since its launch.

In fact, Golix managed to grow its platform and userbase and announced plans to expand into South Africa, Kenya, and Uganda after a successful ICO (initial coin offering) in 2018. However, during that year the country’s central bank issued a moratorium that essentially barred financial institutions from supporting cryptocurrency exchanges. Golix even had its Bitcoin ATM seized as authorities pushed back against cryptocurrencies prompting the exchange company to seek redress at the High Court.

The court did overturn the central bank’s decision in May 2018 but Golix ultimately decided to shelve its Zimbabwean exchange business. In spite of this setback, some Zimbabwe-based traders were unperturbed and continued trading. They simply circumvented local central bank regulations by conducting deals on foreign domiciled exchanges like LocalBitcoins, Paxful, Reminato, Coindirect, etc.

For example, on one of the world’s largest peer-to-peer bitcoin trading platform, LocalBitcoins, there are six offers for bitcoin in Zimbabwe, at the time of writing, with a total supply of less than $30,000 worth of BTC. On the bid side, there are six traders who are willing to purchase the crypto but it should be emphasized that some of these traders could be based outside Zimbabwe.

At the same time Paxful, which has managed to establish itself as one of the most popular peer-to-peer exchanges in Africa, does market bids and offers for Zimbabwe-based users. On first glance, there seems to be more activity in this Zimbabwean bitcoin market than on LocalBitcoins with dozens of listed advertisements. Closer inspection, however, shows that there are no cash in person, EcoCash or local bank transfer purchase options that local Zimbabweans would typically use to trade bitcoin. There are also no available advertisements for transactions in the Zimbabwean dollar (ZWL). Zimbabweans are seemingly not using the platform.

Other peer-to-peer exchanges with a presence in Africa include Coindirect, Remitano, and Cryptogem. However, all of them show little to no activity involving Zimbabwean traders.

Informal Crypto Trading Groups

informal trading groupsEvents of 2018 forced Zimbabwe-based crypto traders to use other platforms to facilitate crypto trading. Facebook, Whatsapp, and Telegram have since emerged as some of the popular platforms where buyers and sellers meet.

For instance, one such chat group has about 31 members but only five members traded over the past 31 days while the value traded did not exceed $2000 at the time of writing.

Interestingly, on August 15, 2019, when cryptocurrency prices dropped heavily, one trader posted that they were selling 25 BTC. Bemused group members apparently not accustomed to such amounts, responded by asking if the seller had possibly made a typo error when posting.

Nevertheless, it is also possible that the traded values could be higher between peers or in other groups to which this writer is not exposed to. BitcoinAfrica.io reached out to one member of Zimbabwe’s crypto community who – besides actually working for a blockchain startup – has been involved in this space for five years, three of which are on a full-time basis. The member who preferred to remain anonymous had this to say:

“Now that the bull run period is confirmed, we are seeing around 30-40k per day of new money entering into the crypto industry locally, with 95 percent plus of that being USD into bitcoin. Potentially, you could double that as we are not exposed to all the groups in Zimbabwe.”

Still, such traded values do not support the hype, which reached a zenith in July 2019, when one online crypto media outlet claimed Zimbabwean traders were paying up to $76,000 USD for one BTC! Of course, this was incorrect.

In activities seen in one chat group, Zimbabwean bitcoin buyers are asked to pay a small premium of between 5 and 10 percent on the global USD bitcoin price. Sellers can choose to receive funds in local ZWL through the mobile money application Ecocash. At the current exchange rate (1:10), a seller receiving funds in ZWL via Ecocash will get about $105,000 to $110,000, a figure that should not be confused with the USD. That is how most bitcoin trades are currently being conducted in Zimbabwe. 

Ignorant Diaspora

Meanwhile, a case has consistently been made for the utility and cost-effectiveness of using cryptocurrencies when sending remittances. Zimbabwe, which has a sizeable Diaspora community, should naturally see more funds channeled via this route. However, statistics from the country’s central bank and other sources like the World Bank show that many Zimbabweans abroad still use formal money transfer agencies (MTA) like Western Union, Moneygram or Mukuru.com to send money home. Many more use informal channels but no one can really ascertain the values transferred therein as there is no reliable data.

It would seem Zimbabweans remain ignorant of the potential benefits of cryptocurrencies while the lack of a properly registered local crypto exchange remains a key deterrent to those interested in buying and using bitcoin.

The anonymous crypto enthusiast also added:

“Zimbabweans need a crypto application that is reliable, fungible, cheap and one that allows for swift transfer of funds. When such a platform becomes available, Zimbabweans will embrace cryptocurrencies in large numbers.”

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4 Reasons Why Black Lives Matter Should Start Accepting Bitcoin

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Black Lives Matter

Systemic anti-black racism is prevalent across the globe. A series of events in the US have catalysed countrywide protests, bringing more eyes to one of the biggest movements against racism, the Black Lives Matter (BLM) movement.

In this piece, we explore the reasons Black Lives Matter would benefit from adopting bitcoin as a method of accepting donations.

Bitcoin Is A Peaceful Protest

black lives matter bitcoinAttempting to resist a system that oppresses you, while leveraging the tools employed by the same system, can be counterproductive and undermine. For movements like Black Lives Matter, it is imperative to utilise systems outside of traditional resources that are not tainted with the prejudice that disenfranchises BIPOC.

In the United States, the black community has long complained of unsatisfactory access to traditional financial services. While there is no shortage of research papers and statistics on race issues, given the current climate, it is important for us to contextualise and understand how traditional financial systems underserve black people in the US.

A study by McKinsey & Co published shows a direct link between weaker financial power and a lack of access to financial services like banking. For instance, predominantly white counties have an average of 41 financial service providers, while black ones have 27 of these financial firms. Further, banking in these black counties is mostly more expensive as compared to white-counties.

Moreover, despite being underserved, black people are overcharged by banks in the very few situations where services are available. 

There are several other examples mentioned in the report that paints a vivid picture of the extent to which black people are unbanked. Other examples cited in the report include requiring higher account balances and difficulty in accessing loans.

This is where bitcoin can come in.

Bitcoin knows no race and does not discriminate. Everyone anywhere can get a bitcoin wallet and purchase bitcoin online. 

By leveraging bitcoin, progressive movements like Black Lives Matter can send a powerful message, addressing the underlying racism prevalent in traditional financial services. With enough steam, it may eventually aid to break down the archaic financial systems that continue to aid in the oppression of minority groups all over the world.

If there is any single reason for Black Lives Mater to accept bitcoin donations, it is because using bitcoin is another form of protest.

Bitcoin Is Censorship-Resistant

Black Lives Matter may find favour in the eyes of regulators and payment processes like Paypal. At this point, it will be almost suicidal for anyone to consider cutting payment channels to the movement. However, if historical precedence is anything to learn from, it is all fun and games till it is not.

WikiLeaks, the famous, was banned by PayPal in 2010 for violating its policies and terms of service.

Before then, over $1 million of donations towards WikiLeaks had come through PayPal. Black Lives Matter may be different from WikiLeaks. However, any loophole that provides an avenue for censorship must be sealed moving forward to secure the future financial backing of the movement. 

Accepting bitcoin as donations would provide a viable alternative, especially given its censorship-resistant nature.

Private Donations 

Sometimes people prefer to give privately without revealing their identity.

Between bitcoin and traditional online payment methods, bitcoin allows for more private transactions. To factor in the privacy-conscious crowd who could be interested in donating to the movement, Black Lives Matter is likely to benefit from accepting bitcoin.

Even though the anonymous nature of bitcoin has been at the centre of debates, Bitcoin’s pseudonymity makes it undisputedly a more privacy-conscious financial tool than PayPal or bank payments. 

Access to a Wider Audience

Black Lives Matter

PayPal may seem like the ultimate financial tool for many, but that is not the case in many places. In some parts of the world, people are unable to use PayPal due to the unavailability of service in their region.

Bitcoin is a universal payment method that is accessible by anyone, anywhere in the world. In every corner where there is connectivity, people can use bitcoin as money. BLM will open up donations to people from all parts of the world.

While there still are people in the Bitcoin community who hold ideologies that belong to past centuries, there are also a lot of people in Bitcoin who support BLM and other movements around the world that fight against oppression. By allowing people to send donations via bitcoin, BLM opens up to bitcoiners around the world who support Black Lives Matter.

In a world where tools that aid human sovereignty have evolved to the point where there is revolutionary money, free from traditional systems, movements like BLM can harness innovations like Bitcoin to further their cause.

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Zimbabwe’s New Foreign Currency Regulations Could Affect Bitcoin Trading

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Zimbabwe’s New Foreign Currency Regulations

Zimbabwe’s newly introduced foreign currency regulations threaten peer-to-peer bitcoin trading via messaging apps.

New Foreign Currency Regulations

The Zimbabwean economy – which has been hit by hyperinflation – endures an ongoing shortage of foreign currencies. Authorities blame illegal foreign currency dealers for exacerbating the situation thus hastening the fall of the local currency. Several regulations have been introduced in the past few months to arrest the situation.

A recent directive by a unit within Zimbabwe’s central bank to outlaw advertisements relating to foreign currency trading has sparked off a panic within Bitcoin trading communities.

The latest decision comes in the wake of a sharp depreciation of the Zimbabwean dollar against the US dollar. Economists blame the country’s biting foreign currency shortages for the local currency’s free fall.

The central bank has pegged the exchange rate at 1 USD for every 25 Zimbabwean dollars towards the end of March. However, the black market rate is now 1:80 or higher.

Financial Intelligence Unit Onslaught

On June 15, the Financial Intelligence Unit (FIU) of the Reserve Bank of Zimbabwe circulated a document that is threatening to freeze bank and mobile money accounts of those caught putting up any advertisements relating to foreign currency trading in social media chat groups.

The FIU alleges it is aware that some WhatsApp groups have mushroomed for the specific purpose of promoting and facilitating ‘illegal’ foreign currency dealings.

Parts of the statement reads:

“The FIU, in collaboration with the police, banks, mobile money/mobile money service providers and relevant regulatory agencies, has embarked on an exercise to identify and take action against individuals who create, advertise on or participate (actively or passively) in WhatsApp groups or other platforms for illegal foreign currency trading.”

The statement goes on to list the steps authorities will take against those caught on the wrong side of these regulations.

Panic in Crypto-Related Chat Groups

ICE3X Launches Debit Card

Some within the cryptocurrency trading communities have suggested that this directive encompasses bitcoin trading as well. Bitcoin trades, just like with the so-called foreign currency black-market trades, are often initiated in social media chat groups.

Moreover, bitcoin-to-fiat trading is typically conducted in foreign currencies like US dollars. Although, there are trades where local mobile money is the preferred method of payment.

Consequently, some traders are now taking precautions by replacing their local WhatsApp phone numbers with foreign ones. The use of foreign phone numbers helps to masks the real identity of traders and their bank accounts from being targeted.

Yet others are adamant that bitcoin—which the central bank has not recognised as currency—is, in fact, a digital asset. As such, it is exempt from the FIU directive. However, the broad terms used in the FIU statement suggest authorities are trying to go after all platforms where foreign currency is exchanged.

Still, others are not overly worried insisting that FIU lacks the capacity to achieve this kind of surveillance and policing. In any case, they say Whatsapp messages are protected with end-to-end encryption. 

BitcoinAfrica.io reached out to FIU to get clarification on the some of the issues raised by bitcoin traders. However, we did not receive a response at the time of publishing.

No Crypto-Specific Regulation

Zimbabwe, just like many of its counterparts on the African continent, does not have regulations that specifically govern cryptocurrency trading. The country’s central bank has in the past issued press statements advising the public against dealing in cryptocurrencies.

At the same time, it banned financial institutions from facilitating the movement of funds between fiat to crypto and vice versa. These decisions culminated in the shutdown of Golix, a cryptocurrency exchange in 2018.

However, since then there has been an apparent rapprochement by the central bank concerning its blockchain technology. For instance, in its last monetary policy statement, monetary authorities again touted the potential of blockchain technology. They even encouraged financial institutions to adopt this.

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Chainalysis and A&D Forensics Partnership to Boost Access to Cryptocurrency Investigative Technology in Africa

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A&D Forensics

Institutions in Africa can now access cryptocurrency investigative technology following a partnership between Chainalysis and A&D Forensics.

Chainalysis and A&D Forensics Partnership

From romance-related crypto scams to shady ICOs, Africa has had its share of illicit investment opportunities. Fortunately, there is a light at the end of that dark investment tunnel. With Chainalysis Reactor, financial institutions, governments, regulators, and cryptocurrency exchanges can identify and stop scam propagators from harming consumers.

“By partnering with Chainalysis, we are providing the African cryptocurrency ecosystem with the investigative technology that it needs to fully understand blockchain activity,” said Senior Partner at A&D Forensics, Adedeji Owonibi.

Chainalysis Reactor is an investigation software by New York-based blockchain analysis company Chainalysis. The software connects institutions to cryptocurrency transactions allowing them to stop criminal activity.

One of the initiatives culminating from the partnership is a plan to work with cryptocurrency training specialists. These specialists will assist regulators, compliance officers, investigators, and analysts to perform blockchain analysis to derive actionable intelligence using Chainalysis Reactor.

A&D Forensics is a Digital and Financial Forensic firm based in Nigeria. One of the services the company offers is blockchain intelligence on crypto-related criminal activities.

How Chainalysis Reactor Works

ChainalysisChainalysis Reactor has a search feature that can tell users which entities are linked to a given wallet and the related cryptocurrency addresses. Moreover, the software scans thousands of forums and darknet websites for relevant intelligence.

Chainalysis Reactor connects cryptocurrency transactions to activities taking place in the real world. Also, users can use the “watch” feature to keep tabs on the future transactions the party of interest carries out.

Another important feature that the software provides is the ability to follow the money. With powerful visualisations, users can create the path of funds under investigation. Additionally, the software can link any suspicious activity identified along that path to real-world entities.

The Chainalysis software is a powerful tool that could benefit many institutions. For example, regulators can track the funds raised during an ICO to confirm that the money was used in the right way. Institutions interested in this software can request for a demo on the Chainalysis website.

Trust is imperative in the cryptocurrency industry now more than ever. With crypto-related scams cropping up now and then, consumers are becoming jittery. Therefore, the Chainalysis and A&D Forensics collaboration could offer transparency in the African cryptocurrency space to encourage government adoption and increase consumer confidence.

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