Earlier this week, ZIMBOCASH – a local decentralised cryptocurrency- listed their token ZASH on Bithumb Global (a cryptocurrency exchange headquartered in South Korea).
In marketing material, ZIMBOCASH is marketing the ZASH token as a
replacement alternative to Zimbabwe’s flailing Zimbabwe Dollar. A total of 4.5 billion ZASH tokens have been created with 950 million currently in circulation.
The Zimbabwe dollar was already collapsing with 500% inflation, before this crisis dealt a debilitating blow. We believe that ZIMBOCASH is perfectly positioned to solve this problem by fixing the amount of money in the country using blockchain technology. Our aim is to provide sound-money.
Philip Haslam, Head of Communications at ZIMBOCASH
I believe Philip’s comments about ZIMBOCASH being perfectly positioned to solve the Zimbabwe’s economic turmoil are a bit premature. We reached out to ZIMBOCASH to understand where Zimbos in possession of the ZASH token will be able to use it and Philip explained to me that they are developing that network and expect “organic use of the ZASH network to grow as the currency environment deteriorates in the country.”
Why list with Bithumb?
For ZIMBOCASH, listing with Bithumb offers the digital currency an opportunity to start making the ZASH token more valuable;
Our first step in establishing value is in getting it listed on an international exchange (Bithumb Global), where there is a market of buyers and sellers. On the basis that there is value – derived from a market price – it can become something that is used in tradePhilip Haslam
It is important to note however that Bithumb the exchange in question has been hacked a number of times;
- In June 2017 hackers stole user information from a Bithumb employee’s personal computer.
- In June 2018 about $32 million of cryptocurrency was stolen from Bithumb in a hack.
- On March 29, 2019, Bithumb said that it was hacked. It pointed its fingers at insiders. Nearly $20 million worth of EOS and Ripple tokens were estimated to have been stolen.
A concern I had after going through ZIMBOCASH’s marketing material was how they were going to communicate the concept of digital currencies to the ordinary Zimbabwean – something they’ll have to do if ZASH is to become a compelling alternative to the Zim dollar.
Philip explained that they have been doing some work on that front but believes ultimately “the pain that people experience in a collapsing monetary system will cause people to naturally find alternatives that work.”
Right now the clearest incentive to get the token is the fact upon signing up for the token you’ll get 3125 tokens. The issue with that is the value of those tokens will depend largely on the network in which you can use them. If there’s nowhere to use them 3 or 4 months down the line – are they valuable?
The elephant in the crypto-shaped room has been regulation or lack thereof. Interested parties would want to know what guarantees there are that the tokens would be safe. If they get the token, will ZIMBOCASH turn out to be another Golix? The expectation is that it won’t be a problem since they are currently not regulated locally and not making use of local banks at the moment:
We are not operating through the banking system in Zimbabwe. There is no “cash-out” or “cash in”. Zimbabweans are allocated the token directly by signing up at our website www.zimbo.cash. There is no charge for signing up. It is similar to signing up for Facebook.Philip Haslam
Cryptocurrency and volatility
For those who have fears regarding volatility, Philip explained that volatility is to be expected with any currency however they belive that as their network grows stability will increase alongside;
There may be volatility in the price – however, all currencies have some level of volatility. Ultimately, as a network of scale grows, the price is likely to become more stable. This is why a reference price on a market is used in trade.
However, with Zimbabwean history, people are used to changing their prices to the market rate. With the current system, people need to mark their prices to a market rate regularly. Our concern isn’t what the price will be – our concern is that there is a price. If we get a price, we would have added value to a whole lot of Zimbabweans who have been allocated ZIMBOCASH, who can use it in daily trade.Philip Haslam
That has been one of the biggest knocks when it comes to cryptocurrencies. The lack of centralisation seems to come at the price of security and accountability when things go wrong.
At the time of writing ZASH is being distributed solely via internet channels (Bithumb and the ZIMBOCASH website). If ZIMBOCASH is to realize their dream of dethroning the ZW$ as the local currency that’s another aspect they’ll have to improve to ensure that the Zimbabweans who aren’t on the internet are also included among those who can transact.
Once you have the currency where will you be able to use it? Right now beyond trading, your options are limited at the time being. In future, ZIMBOCASH will be more useful;
Ultimately, we would like to see people being able to pay for imports denominated in ZIMBOCASH. This last step would require a very liquid international exchange where there isn’t price slippage when there is a cash-out. This is something that needs to develop over time.Philip Haslam
Update: An earlier version of this article claimed that ZIMBOCASH was looking to replace the ZW$. This was inaccurate and the intention of ZIMBOCASH is to offer an alternative, NOT a replacement. We apologise to ZIMBOCASH and our readers for the misinterpretation.