For the past two decades, Zimbabweans’ least favourite currency has been their own. During that time the country’s currency has been setting and breaking records, almost none of which do anything to imbue citizens with national pride. A multicurrency system was adopted for a few years but it all went tumbling down when the tattered state of the economy caught up with it. Zimbabwe is a country in dire need of a better currency (and economy) in a world where every version of its official one has been a wealth wrecking disappointment since the dawn of the 21st century.
The mid-to-late 2010s saw a rise in both the number and prominence of cryptocurrencies. As these currencies gained visibility many people started speculating on how they could be used to reduce the burden borne by locals which are caused by the shortcomings of our national monetary and financial systems. Out of the few local platforms, applications, services and what not built around cryptocurrencies, Zimbocash is arguably the most ambitious. The creators of the local cryptocurrency believe that its independence from RBZ manipulation can make it a stronger, far more stable contender to our much-maligned official currency.
Towards the month end of June (2020), Zimbocash started gaining an unprecedented level of popularity with referral links to sign up for the currency flying around on Whatsapp and the rest of social media. I also saw some ads from people who claimed that they will part with anything from airtime to actual RTGS dollars in exchange for Zimbocash. There were a lot of pranksters and fraudsters in the mix but many of the offers were probably genuine and sincere. However, despite all of this together with our support and optimism, there are still a lot of hurdles that Zimbocash and its creators have to overcome, not to mention all the burning questions we have that we know are difficult to answer.
The problem with any kind of centralisation
While the people behind Zimbocash adamantly claim that theirs is a decentralised currency, the very fact that there is a group behind it raises a lot of implications. To begin with, we can only guess at how much power and control these people currently have or will latter have over the currency. Also when it comes to cryptocurrencies, the decentralisation that is often touted is only limited the kind that allows peer-to-peer transactions to occur. This means that there are still are groups and organisations which have large amounts of control over these currencies; there can be and there has been a lot of politics that significantly impact these currencies and their holders.
Cryptocurrencies—their futures and their valuations are thus often far more vulnerable and subject to the whims of far fewer individuals than you would expect. Even more importantly the continued existence of any group of individuals that has any modicum of control over Zimbocash makes the currency vulnerable to any RBZ decision that may be detrimental to its (the currency’s) future. As I write this, many of the Zimbocash team members are known and as far as I am concerned, well within the very clumsy but yet so powerful reach of the RBZ which has a well-documented hostility against anything to do with cryptocurrency.
The ever-present threat of the RBZ/FIU
The Financial Intelligence Unit is a branch of the RBZ that among a host of other functions is responsible for battling money laundering in the country. A couple of years ago just as cryptocurrencies like Bitcoin were gaining popularity locally, it pounced and effectively made it impossible to run (among other things) any local cryptocurrency exchange. One of the victims was Golix, arguably then one of the country’s most promising tech startups.
The anonymous nature of cryptocurrency transactions continues to make them a prime target for any regulatory body whose mandate is to curb money laundering, particularly in Zimbabwe where the extent to which these organisations can flex their powers can be quite astonishing.
All that this means is that as Zimbocash continues to gain popularity and attention, it will eventually draw the wrong kind. Lately, the RBZ has been demonstrating its ability and willingness to bulldoze through any organization that even remotely violates any interpretation of the laws that it enforces—just ask Ecocash. So far I have neither seen nor heard anything that suggests that Zimbocash has any kind of contingency against the almost inevitable regulatory hostility.
Inflation will work in its favour
Zimbabwean interest in the likes of Bitcoin waned partly because we lost access to the foreign currency that allowed us to trade with people outside the country. Zimbocash presents an unprecedented opportunity to trade in a cryptocurrency using our own Zim dollars—of course, this may also be one of its major weaknesses (more on that below). Also, the high inflation rate of the Zim dollar itself is likely to reduce the apprehension and perception of risk that is normally associated with trading in volatile virtual currencies.
Potential weaknesses of the currency
One of Zimbocash’s biggest disadvantages as a currency, like any other commodity which is speculatively traded, would be its volatility which will only increase as it gathers momentum. This could be problematic for a currency that is mainly marketed as an alternative to one of the least stable currencies the world has ever seen.
At the moment I believe that Zimbabweans yearn more for a currency that would serve as a more reliable medium of storing value than one for transacting. Also, the currency appears to be built with an overemphasis that it is for Zimbabweans. This is likely to alienate foreign traders from stronger economies who would otherwise have bolstered the value of the currency by participating in its trade. If the cryptocurrency is isolated from any other fiat currency than our own, the fortunes of the two would inevitably become intertwined—owning any unit of a currency whose value has anything to do with that of the Zim dollar has not been thrilling for almost 20 years.
We would love to hear your thoughts on and experiences with Zimbocash.