A UK-based Zimbabwean Lawyer, Prosper Mwedzi has created the first ‘tourism-focused’ cryptocurrency in the country. VicFalls Coin is a crypto that he hopes will be used in the tourism sector, particularly in the Victoria Falls Community (both in Zimbabwe and Zambia). Though the coin seems like a grand idea on the surface, there are many questions that remain unanswered and in its current state I’m not sure who would use the coin or why they would use it.
The coin runs on an already existing blockchain; Waves Blockchain. Waves is an open-source blockchain platform that allows users to launch their own custom cryptocurrency tokens. The coins are being given away on the VicFalls Coin website and if you are interested you can sign up for the coins here.
Why is it free?
Well according to their website VFC is free because:
This token, apart from aiming at bringing tourists to Victoria Falls, it is meant to encourage the adoption of crypto-currency in the third world. Some people cannot afford to spend money on digital assetts, others are still worried about losing money in the new technology, others are simply reluctant to embrace it. Giving digital assets for free will enable the VFC Community to experiment with the asset and send it to one another without risking any money. It will enable the community to engage and feel that they are part of something and organically grow the value of the token. Lastly, there are currently too many scams on the market involving crypto-curencies, therefore if you offer something for free, you reduce the prevalence of scammers taking over the platform
The free coin approach seems to be a blunder because that means when someone trades their free coins and they are converted to hard currency or for another crypto then someone is going to have to pay for the coins being given away right now. Not a particularly sustainable business model unless the backers have hoards of cash that they are willing to burn through.
Based on the quote above it seems like these guys are good Samaritans. All their aims seem very selfless and not motivated by profit. Is this the best way to run a business? Maybe the founder is willing to fund the trade of coins initially and then pull out once there is a functional ecosystem around VicFalls but this was not stated on the website, and is an assumption on my part. In terms of making profit the guys seem to be playing the long game.
The token will gain value… eventually
The creators of the coin believe it will gain value as more people use it:
The community as a whole will have the onus to add value to VFC by building partnerships with local business to offer discounts in exchange for the token.
I’m not sure if this is a particularly good idea as the same people who VFC founders have already noted as being in need of convincing to adopt digital assets will now have to also rally behind the use of these same assets in their day to day lives. In an environment where even the most popular cryptocurrency (Bitcoin) is facing the same problems of wider adoption, what are the odds of a community pushing a coin that has no clear use case or backing?
What’s actually backing the coin?
Usually, crypto-currencies are either utility coins or security coins. Allow me to get a bit technical and explain the difference between utility coins and security coins.
Utility coins allows provide holders of the coin with future access to a service or a product whilst security coins/tokens derive their value from external/tradeable assets. VicFalls Coin does not seem to fit either of the two categories as of yet because the founders have not really proposed a specific use case.
Time will tell
It will be interesting to see what VicFalls Coin becomes but right now in its current state it seems like something that would appeal more to hobbyists or enthusiasts than a viable trade object. I also wonder how they will actually boost the adoption of the coin.