Using Bitcoin in Zimbabwe, Part 3 of a Six-Part Documentary Podcast Series

After three weeks of listening, recording and talking bitcoin (BTC) in Africa, podcaster Anita Posch is back in part 3 of her six-part documentary podcast series. Presented in audio and full written transcript below.

Listen/subscribe to the CoinDesk Podcast feed for unique perspectives and fresh daily insight with Apple PodcastsSpotifyPocketcastsGoogle PodcastsCastboxStitcherRadioPublicaIHeartRadio or RSS.

In the first and second part of this six-part series you heard about the difficult living situation, the hyperinflation and about the multi-currency world that Zimbabweans have to live with since many years. In this – the third part – you will hear from two early bitcoin (BTC)  adopters based in Harare. We speak about the different use cases for bitcoin, how it can be exchanged to U.S. dollar and RTGS [the Zimbabwe dollar], what the obstacles and pros are, about regulation and what the two online entrepreneurs want to tell people outside of Africa.

Bitcoin in Africa: The Ubuntu Way Part 3: Using Bitcoin in Zimbabwe

Hello again my dear listener. Whether you are a regular subscriber of my show or a new listener, it does not matter, I am glad that you are here. If you are new, please take some seconds of your time to subscribe to the Bitcoin & Co. podcast on your podcast player now. If you are a fan already, please consider writing a recommendation on Apple or Google podcast or wherever you’re listening to help other people to find my show.

In the first and second part of this six-part series you heard about the difficult living situation, the hyperinflation and about the multi-currency world that Zimbabweans have to live with since many years. In this – the third part – you will hear from two early bitcoin (BTC)  adopters based in Harare. We speak about the different use cases for bitcoin, how it can be exchanged to U.S. dollar and RTGS [the Zimbabwe dollar], what the obstacles and pros are, about regulation and what the two online entrepreneurs want to tell people outside of Africa.

After the interviews I will answer a listener’s question about the possibilities for rural communities to use bitcoin. If you, too, have a question, feel free to visit the episode page at https://bitcoinundco.com/en/africa3. There you will find an audio recorder to record your question.

This podcast special and my trip to Africa would not have been possible without my sponsors and supporters. Thanks to my sponsors: LocalBitcoins.com the person-to-person bitcoin exchange site founded in 2012: LocalBitcoins allows you to trade directly with another person. This makes the process customizable, lean and fast, as there is no corporate overhead. You can get your bitcoins instantly. For every trade, LocalBitcoins.com offers escrow protection to ensure the bitcoins and both traders are safe.  

Thanks to SHIFT Cryptosecurity, manufacturer of the hardware wallet BitBox02,
Peter McCormack and the whatbitcoindid podcast, whatbitcoindid, manufacturer of the Card Wallet and many thanks to several unknown private donors, who sent me Satoshis over the Lightning Network.

This special is edited by CoinDesk’s Podcasts Editor Adam B. Levine and published first on the CoinDesk Podcast Network. Thank you very much for supporting the Bitcoin in Africa series with your work.

Thank you also to CoinDesk Podcast Network, for donating several gotenna devices to set up a mesh network in Zimbabwe, to stakwork.com – the place to earn bitcoin over the Lightning Network and to Team Satoshi, the decentralized sports team for supporting my work.

This special is also brought to you by the Let’s Talk Bitcoin Network.

If you like my work and the Bitcoin & Co. podcast, please take a minute to share it with your friends on social media and subscribe to the feed in your podcast player. You’ll find the subscription links at: bitcoinundco.com/en/subscribe

Internet Marketer and Trader  

I am an internet marketer. I’m also an online entrepreneur. So I do affiliate marketing, as well I do trade bitcoin, as all trade other currencies. So I’m also formally employed, but for now I enjoy doing online business, that is trading bitcoin as well as other currencies. 

How did you start that business? I mean, have you been in school and studied that or did you learn everything by yourself?

Internet Marketer and Trader  

No, I learned everything by myself just from peers. I think back in 2015 when there were bitcoin hypes mainly in Zimbabwe, currently in Zimbabwe at that time, we could trade using USD. So that’s when I got to know about bitcoin, but it was not educational. It was not formally education. Yeah. 

Somebody told you about bitcoin or did you research it by yourself and find it? 

Internet Marketer and Trader  

Actually, there was somebody who told me about it. Then I went on and research more about it. And how, what is it, how it was started, the history of bitcoin, the history of crypto currencies and so on.

Yes. Okay. And when did you start trading with bitcoin?

Internet Marketer and Trader  

I can say I started trading big in 2016/17. That’s when I started trading, like online trading.

Do you have platforms here in Zimbabwe to do that? Or do you do this on other platforms?

Internet Marketer and Trader  

No, not in Zimbabwe? Yes, there was one company in Zimbabwe that whereby you can withdraw USD when you have bitcoin, but it wasn’t supported. It’s not like there was support like government support or there was no support. So they come and closed because of other things. Mainly regulation.

Yeah. But how do you do it then?

Internet Marketer and Trader  

Okay. In Zimbabwe, like, we do have peers down in South Africa, in the U.K., in every way. So how it said bitcoin is when you do have bitcoin say in your BTC wallet you can then give somebody who wants to trade in bitcoin, we exchange like peer-to-peer, you send to each other then the person can give you hard currency.

Okay, so you know these people already or do you find them on platforms like LocalBitcoins.com or other platforms?

Internet Marketer and Trader  

Mainly I started knowing those people through hypes, if you know what I’m talking about, you know, those network marketing companies that said you can donate bitcoin then you can receive bitcoin; so many people, so many things. But then we met under bad circumstances with bitcoin, where people can, actually their bitcoin can get stolen. After you, you’re given promises that you’re going to get something if you donate, say, $10 worth of bitcoin you’re going to get $100 more, so usually after something bad happens mostly in Zimbabwe. That’s how people get to know about bitcoin, “Ah, this bitcoin is bad, this one this one, but no. Then I started researching more about it; now we know people are genuine who said between genuinely only because there are no companies actually that’s really trade bitcoin in Zimbabwe. Yes they were but they are not open enough to trade bitcoin openly because there’s no regulation around that. That’s that cryptocurrency issue. So that’s how we know it in so many groups now on WhatsApp, in Telegram, also on Facebook. Yeah, bitcoin groups, whereby people now know this is a bad company, this is a good company where you can join bitcoin.

Yeah. Okay and if people here would like to get bitcoin how to proceed? I mean, can they earn it in a way or do they buy it for RTGS? How is this working?

Internet Marketer and Trader   

Okay, let me say in Zimbabwe, when you want to trade bitcoin into RTGS that’s actually, we do it the longer way. As traders what we do is we do have bitcoin in my wallet; besides the peer-to-peer I take the bitcoin to my Skrill account. Then if you put into Skrill you can take it to your FCA account, which is a USD-funded account. So it’s actually a longer process for us to then access the RTGS, you understand? Yeah, so we prefer peer to peer. Here in Zimbabwe it is actually easier and no charges, because the longer route when you get your money into the bank, then the bank charges are exorbitant. Yeah. No one would like that and you get your bitcoin also in RTGS, you will not withdraw in resistance. So there is so much regulation. Yes, there’s so much regulation and around that withdrawal of bitcoin in Zimbabwe. So we prefer peer-to-peer.

Which other use cases do you see for bitcoin here in Zimbabwe besides trading?

Internet Marketer and Trader   

I think it’s easier because in Zimbabwe, you know, we do have a currency issue. We are a multi-currency economy. So I think if we introduce bitcoin, the easier for everyone because you can trade in a currency that’s in bitcoin, which is a cryptocurrency that you know. It’s something solid. Yeah, so I think it’s through ease of doing business.

Do you think that people know already that bitcoin is more solid than maybe their own currency here?

Internet Marketer and Trader   

For some of us, we’ve really researched about it. We know even the volatility around bitcoin. We have been there, we know just like any other currency in the world that bitcoin can go up and go down. So we are not afraid. We’re not afraid to trade in bitcoin ,you’re not afraid to actually buy in bitcoin. There was another time that I was in South Africa, I actually used my, you know, there was a company that I joined like a multi-level marketing company, IML, which teaches you how to trade, they will give you a card a bitcoin card, you apply for the card, actually, then you can actually swipe using the card. So, we can also do that in Zimbabwe. I think it will, the ease of doing business also, it can solve the cash shortages, and the much-needed foreign currency can come also to Zimbabwe. Yeah.

Okay. And how do you see the future here in Zimbabwe for bitcoin?

Internet Marketer and Trader   

What I think is Africa is the future. So, we are still a …land when it comes to innovations, new innovations like bitcoin, we have to actually there is room for growth, there is room for growth. I would not lie because I would like to say maybe 75 percent of the adult population, they don’t know about it. So if people get to know about it, get awareness about it, I think it’s actually a huge market.

But I think not many people can afford the internet here. So that might be a problem or because I think having a phone or having a mobile plan is very expensive for the big part of the people here because they are unemployed and they live day by day. 

Internet Marketer and Trader  

Yeah. Most people is, just the economic situation. But there were times like back in 2014, 2015. Things were actually better. It’s actually a phase which we believe is in Zimbabwe, we believe things are going to be okay. It’s only an economic situation in Zimbabwe, that is, everything is actually expensive. Besides internet, food is expensive, everything is expensive at the moment, but we believe probably if the right decisions are made, then I believe Zimbabwe can go far. Yeah.

Do you follow technical advancements in bitcoin or other cryptocurrencies, or are you a user mainly? 

Internet Marketer and Trader  

Yes, I tried to follow but nowadays I’ve decided to stay, let me stay in one lane, because there were so many bitcoins coming. There were a lot even in Zimbabwe. There was Zimbocoin, if you have heard about it, there is this Zimbocoin. So there were so many cryptocurrencies. I’ve been following people who brought so many other cryptocurrencies but I decided no, let me stay in one lane, because like I told you, how I got to know bitcoin, most people in Zimbabwe, they got to know through bad experiences. Well, then people went to the newspaper and said, I lost money in bitcoin. So it was mostly bad publicity about bitcoin. But that’s why I said I follow the news. Yes, this is developing, it is going up, it is going down, also litecoin (LTC).  There are many bitcoin and cryptocurrencies that are coming. But let me say, I decided to just follow one path.

Yeah. So you’re interested in other cryptocurrencies but as I understand it, you have your trust more in bitcoin than in any other. 

Internet Marketer and Trader

Yeah, exactly. Yeah. Also litecoin and I also tried zimbocoin, you know, the local one.

Okay and what happened with zimbocoin?

Internet Marketer and Trader

They are still crowdfunding.

I mean I always see the problem with these new coins or tokens is that you have a leader, then you have a company, you have a group of people who is behind it. Yeah, you don’t have that with bitcoin. You know, it was like a genius, immaculate birth.You know, and nobody can get hold of anyone and use those coins. I mean, it can’t be seized, it can’t be frozen. I mean, the company can..

Internet Marketer and Trader

..close Yeah. Yeah, these traces, you can trace somebody, if you lose money you can trace it down to someone. But with bitcoin that wasn’t, we believed, it was a belief that Satoshi brought a bitcoin. But it’s one belief we didn’t know. You know, we couldn’t even trace it back to him, you know? Yeah. So it was just a belief in everything, yeah.

And we all don’t know who the founder of Bitcoin is. 

Internet Marketer and Trader

Yes. It’s a belief. Yeah, yeah.

Do you think that if the bitcoin price is rising again, then the hype comes, that there will be another bunch of new people coming into bitcoin also in Zimbabwe?

Internet Marketer and Trader

I think so. In Zimbabwe, oh, let me say we take risks. Yeah, we take a lot of risk. So we jump into anything especially the internet, the online entrepreneurs in Zimbabwe. I’ve been in so many groups of in online entrepreneurs they, they follow each and every hype especially if somebody says this is working and your mentor probably says this is working; you jump in and then if it fails, it fails. You know, because we have first a lot of losses, a lot of sad insurance losses, so much that we take any risk now. Yeah.

Talking of risks, I mean, everybody knows not your keys, not your coins. You should hold your own private keys for your bitcoin. Do you have something like hardware wallets here in this country? Can you buy hardware wallets here?

Internet Marketer and Trader

Not that I know of. Hardware, no. So somebody tried it here in Zimbabwe but I think it died a natural death, it wasn’t successful. We do not ..have you said hardware? Not in Zimbabwe. Not that I know of.

So you basically use your computer or your smartphone for a while, actually.

Internet Marketer and Trader

You know, a lot of online entrepreneurs, internet entrepreneurs. Yes. And are there also a lot of developers here? People who are doing programming and stuff?

Internet Marketer and Trader

Yes, yes, yes, there are. People that [do] web development. Like languages, like programming languages? Yeah. There are a lot of them actually have universities and colleges that teach all of that.

Do they work internationally, like living here and work for companies abroad?

Internet Marketer and Trader

Yes, most people usually relocate. But there are online entrepreneurs that I know, say we do have a common website, Afriblocks, if you have heard about it. It’s actually an innovation, whereby I think it solves an unemployment issue in Zimbabwe, whereby web developers, people with so many skills, web designers, graphic designers, also writers, they have so much skill here but these high unemployment rates, so it’s actually solving that issue. So I know a lot on that platform actually. Particularly on that platform. We do have a group of people who have done so many jobs outside internationally, but they are here in Zimbabwe.

And do you know how they get paid? Do you think they use bitcoin?

Internet Marketer and Trader

Yes. Actually, I did a job, I think two twice or three times, I was paid through bitcoin. Yeah, it’s easier, there are no charges whatsoever. Just receive your bitcoin. That’s it, and you withdraw  using the methods that I told you, like peer-to-peer.

Sounds very easy, actually.

Internet Marketer and Trader  

Yes. Actually easy. Very.

Because I think many people have, like, a problem to touch it because they think it’s difficult or they cannot imagine that it’s only a virtual thing. You know, many people want to have a paper note.

Internet Marketer and Trader    

Exactly, they are used to the old times. Yeah, yeah. This 21st century we have drones now. So the old times, the old times are gone.

Do people ask you, how do you use bitcoin? Can I do it, too?

Internet Marketer and Trader   

Yes, my friends actually, my friends. This is exactly what is it, I don’t understand; most of the times I send them information. I send them PDFs to read. They don’t read at their own risk. So when initially they ask me what is this bitcoin, I send them information. 

Can you send them videos, too? Or are the internet connections so bad that they can’t view YouTube videos for instance?

Internet Marketer and Trader    

Yeah, for YouTube. Most people, they don’t use YouTube because of how expensive internet is. But fortunately for me, I do have access to cheap data, actually free data. So I get to do a lot of things, I get to discover a lot of things.

What would be better ways for people here to produce educational material for them? Because in Europe and in the U.S., everybody has YouTube, you know, because there’s no such thing as a problem with internet connection. Okay, and what would be a form of learning material for people here that would be easy, consumable, too, because you’re just as … if I understood, you said you sent them PDFs but they don’t read them or do they?

Internet Marketer and Trader   

Maybe they just do not, but maybe the easier form is to send information. In Zimbabwe, usually most people use WhatsApp and Facebook. If you post a video on Facebook, probably a five-minute video, people look into that. So it should be short videos [or] first use Facebook or WhatsApp also. Yeah, people they do use WhatsApp.

Do people here also use Twitter?

Internet Marketer and Trader  

Yes, they do. But here in Twitter they say it’s for the nerds for, like, the upmarkets. Twitter, they say, is not, like, for everyone. Not everyone is on Twitter. 

Yeah, I understand what you mean. It’s the same in Austria. Not everybody’s on Twitter. And what would you say? Should foreign people like me or companies do differently in Africa or what could we learn from you?

Internet Marketer and Trader  

Okay. As Africa, I think, we as a developing continent, there are a lot of things that are in the developed countries that are not here. So I can say for Zimbabwe culturally, people are willing to learn. Most people here, they believe in good things. They have hope. So I think in Africa they are hardworking, so much that if you bring something innovating, something good that can solve unemployment, youth problems, energy problems, I think in Africa you can learn the goodness of the heart of the people of Africa. That’s number one, that I guarantee them. Yes, there are instances that prove otherwise. But generally, people from Africa are hardworking, and they believe in innovations, they usually hope for the best things to happen here in Africa. So, I think if there are innovations that can solve money problems, because in Zimbabwe it has been about money. It has been about currency through the past decade, it has been about … we do not have a Zimbabwean dollar. We’ve gone through so many currencies, are the only nation that has used billions as a nation. So, cryptocurrencies coming to Zimbabwe. I think it’s an innovation that can really change a lot, but how are you going to learn from us? Maybe you have just to see.

Do you think that bitcoin can help communities here?

Internet Marketer and Trader   

Yes, it can, it has the success of an innovation, I think it helps the community. I think if bitcoin, there is investment in knowledge, there is investment in awareness, there is investment in the, like, free knowledge about it, then people can can really come through to invest in bitcoin. T hey can come through to even use it. Bitcoin is a good thing but there is need for us to preach the good about it.

What I hear is it would be great or it could be a possibility to support African nations, African people in education about cryptocurrencies. 

Internet Marketer and Trader     

Exactly, so like, how to mine. We know there is mining but I do not know exactly.

Internet Marketer and Trader      

No. Electricity is expensive, we are not able to do that for now.

I also always think that countries like Zimbabwe are a much better place for bitcoin usage because you have that bad money. 

Internet Marketer and Trader    

Yes, we do have a currency problem. It’s been more than a decade actually with the currency problem. So it’s a multi-currency system, which we can as well introduce the bitcoin.

Yeah. But do you think that government will regulate that, like, forbid it or regulate it down? Like they did with with this one platform?

Internet Marketer and Trader 

I think the government, it’s only, let me say from my observation, is the government only deals with reviews. If people come with complaints and if there are good reviews about it, you see, it’s helping us to do this, is helping us to do that. I would like to think the government would have no obligation to stop it. If there are good reviews about it, if it’s actually helping the communities, if it’s actually helping … I think the government would have no obligation to stop such an innovation.

Is there anything you want to say to us other people – like not-from-Africa people?

Internet Marketer and Trader 

Let me say, Africa is the future. That’s my go-to points. But because what I can say is there is a lot that needs to be happening in Africa. There is a lot of development, whether in the health system, in the energy sector, in the money sector, the economic sector, there are a lot of things that are yet to happen. So what I can say is, if there are investors out there, Africa is the place to be. If they are architects, Africa is the place to be right now. Because if you have seen our roads, if you have seen our buildings, there is still a lot that needs to happen, still a lot that needs to happen here in Africa. So, we as Africans, we are looking into the European countries, but mainly to acquire the knowledge because we need to do that in Africa. Only, we do not have the capacity to do that, we do not have the money to do that. We do not have probably the most knowledge that we may need to to achieve certain things. Also, is Africa I say I think the people here, there is some willingness here that I’ve seen. I’ve been in other African countries, South Africa, Uganda, Kenya. There are countries that are developing. But if there is more investment in Africa, I think Africa would be abe a better place than it is now. Because there is room for improvement. There is a lot that can happen here. So, look,  Africa, it’s where the future is. Africa is the place to be!

Yeah, thank you for this. That’s a nice ending. Thank you very much for your time and bye bye to Okay, bye.

And now a short word from my sponsors:

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And how did you get into bitcoin or how did you find bitcoin?

Well, you know, when I actually started, I started somewhere in 2011 and it all started with questions. You know, you just wonder, how do people generate income online, and then I’ve spent a lot of time doing a lot of research and a little failing as well. And a little bit of making money in the process and somehow I came across bitcoin because one of the companies that I was actually doing affiliate marketing for, they wanted to send me my money through bitcoin. So the other methods were not really working. So that’s when I developed interest in using between that’s how I found about bitcoin.

Okay, so maybe you can explain when you earn in bitcoin, do you use bitcoin then here for daily stuff? Or do you have to exchange it into Zimbabwean dollar or U.S. dollar? How do you do that?

Okay, so if I earn bitcoin say I promote something on the internet, I get paid in bitcoin, I cannot walk into a shop or any company to buy using bitcoins, because a few companies here actually accept bitcoin – if none, maybe zero companies actually accept bitcoin as a form of payment. So what I then do is I go to some websites, I look for someone who needs bitcoin, and they send me the U.S. dollars. That’s what I do.

Okay, so these websites are exchanges then? Yes. Like, which ones are available here in Zimbabwe?

The ones that are available in Zimbabwe is LocalBitcoins. You can actually use that one to exchange bitcoin for cash, and there is another one which is called AirTM. I also go there and say, hey, I’ve got bitcoins, can you send me some money so this is like a marketplace for people when it’s between those people.

It’s from people to people to peer.

Yes, peer-to-peer, peer-to-peer.

And do you have the feeling that there are other colleagues, a few other entrepreneurs who

Yes. So the thing is, I can safely say that I’m one of the early adopters in terms of using bitcoin in Zimbabwe. And since I started using between some few years back, comparing that to now, I realized that there is more and more people that are looking for information about bitcoin in Zimbabwe, that are starting to use bitcoin that are starting to appreciate bitcoin so the numbers are actually growing and looking the years to come, the numbers actually going to expand. Yeah.

What are the problems for people here when they want to use bitcoin?

Okay, there’s quite a number of problems when it comes to using bitcoin and I’ll just mention a few. One of them is awareness. Like, are people well educated about what bitcoin is and how it works? Because the moment someone has bitcoin and internet money, and then they equate scam, okay? They think of losing money and stuff like that. That’s how most people relate between to, but bitcoin is beyond that. So one thing that I see people lack is awareness education, what is bitcoin? How it works? Where did it come from, and stuff like that.

And what’s the difference to other forms of cryptocurrencies or maybe to Facebook Pay?

Okay. So, um, I would say that most African countries we are still developing in terms of understanding how the internet works and all that. So right now we’re actually living in an era whereby some of our African nations of some of our African people, they don’t even use the credit cards, they don’t even use Facebook Pay, they don’t even use PayPal. Okay. Okay. And there is this thing again, that is called bitcoin on top of what they don’t know, that they’re supposed to use. So there is a little bit of a gap in terms of knowledge. Some people use Visa cards, yes, for those that use Visa cards and Paypal mostly they understand they are quick to understand what Bitcoin is, is all about.

What do you think are the use cases for Bitcoin here in Africa, or in Zimbabwe? 

I foresee if I can walk into the future. I see a lot of people actually taking the bitcoin method because of, number one, our inflation rate. Okay, so what I mean is normally human beings, they are good at defense mechanisms. Like, if I take a knife and cut your hand, you’d want to grab a cloth and try and cover that so that you heal fast. So if people get to a place whereby they’re not comfortable, they try and look for solutions, okay. So, with our inflation rate, some of the people can actually use bitcoin as a method to save money like, okay, if I have my hundred dollars, instead of keeping it in the bank, I’d rather keep it in the bitcoin value. I see people doing that. I also see people using bitcoin in terms of international, international easy money at freedom in terms of you know, the world is going digital. There’s sometimes where you do work and you want to get paid your money and maybe the easiest way would be bitcoin. So I see a lot of people using bitcoin in the future.

Are there a lot of other cryptocurrencies around that are used here?

The most common one is bitcoin…

..and you mean BTC because we also have other bitcoins, we have bitcoin cash (BCH),  we have bitcoin SV (BSV), but you mean bitcoin?

BTC Yes, BTC the other currencies, though people use them, but not that much. But it’s, it’s, it’s BTC? Yeah, yes. Yes.

Okay. And today when we think of the usage today I have heard that there was an exchange here, colleagues, and it has been shot cown by the government because of regulation. How is regulation here in Zimbabwe towards bitcoin?

Okay, you know, the thing is my feeling about that I’m just going to share my, my personal feelings in terms of, in terms of that case. Number one, I used to use Golix. Okay. And when government gave an announcement, I actually read their announcement in terms of what they’re, what they’re doing some work and so on both sides. And see. That’s my analysis. Golix was a good initiative. Okay. Golix was a good initiative initiative. But let’s look at the people that are using bitcoin without the knowledge of how bitcoin works. Okay. So during that time, there was a lot of activities, online scams that were happening in Zimbabwe. Okay, part of the people that used bitcoin in Zimbabwe, they used them in online schemes, online investment programs. So some of the investment programs don’t end well. Okay. So on if you think he wants to invest in a certain business for some daily returns, weekly returns or monthly returns, and the investment is asking for bitcoin. And I searched on the internet and look for users between Zimbabwe I find out this Golix, I buy my Bitcoin I do my investment. And then I lose my money in bitcoin, the next thing that I do is, I go to the police and report my case that hey, I am actually, I’ve actually lost my money and the police would question: How did that happen? And the police I would say that it happened through bitcoin. And just because the bitcoin transaction is – the true identity is not traceable. Now, getting into the shoes of the government handling those issues every day. Like a lot of people losing bitcoin, that person loses bitcoin, that person loses his bitcoin at the end of the day, the government is there to protect his people. So only think of a lot of cases that are reported of people who lost money in bitcoin and the government cannot protect you for the money that you have actually lost. So that’s when the government issued a statement that if you want to participate in bitcoin, if my memory serves me, well, the statement says that if you want to participate in cryptocurrency, just know that you’re doing it at your own risk. If you lose money, then it’s up to you. So the government issued the statement, and then that actually affected the operations of, of Golix. That’s how I can actually comment on that case.

So you don’t think that is It’s about government control that they don’t want people to send bitcoin or money from here to other countries well, or into bitcoin, you know,

Well, I wouldn’t no, because at the end of the day, if you look at the features of bitcoin, no one can really stop anyone to use bitcoin. Okay, so our, you know, their reason, what was their motive? But in my case, like I’ve explained, at the same time, there are people in Zimbabwe that are losing bitcoin through bitcoin investments. So at times I cannot answer for the government. Yeah. What, why they made that decision. But my feeling is that, yeah, there can be a lot of cases to answer in terms of people that have been scammed through bitcoin. Yeah.

Yeah. Or through other people who used bitcoin for this scam. 

I created a bitcoin course that explains the between basics for our people so that they understand in our own language.What I mean by that is okay. When you search for information on the internet, if you’re searching from Zimbabwe, you set out to use bitcoin so you get a lot of results. Like you get someone who is in America explaining what bitcoin is, and someone in Zimbabwe explaining what bitcoin is, just because someone is searching in Zimbabwe, they would prefer to hear the person who’s in Zimbabwe what they say about bitcoin. So when I’m saying about in my language, I’m just saying getting people to understand bitcoin from a Zimbabwean perspective.

What’s the difference in the Zimbabwean perspective to our, or the western world? What would you say? What is the cultural difference? 

There is no cultural difference because the lessons are conducted in English so everyone will understand. Yeah, but there are some use cases that you learn from the western world that don’t apply here.

Okay, and which is, which ones are that?

If you want to buy bitcoin with a credit card, it’s almost impossible to do that in Zimbabwe. So you can listen to a western video saying, hey, if you wanna buy bitcoin, go to this website, use your PayPal account, use your credit card, use a Visa card, and stuff like that. But when you come to do that in Zimbabwe, it won’t work. It won’t work that way. So that’s what I mean. So I’ll be explaining what works in Zimbabwe, other methods of doing stuff. Yes. Other methods of doing stuff in Zimbabwe. Yeah, that’s what I explained.

So what’s the recommended way to get to have bitcoin here in Zimbabwe?

Well people they have good different ways to get bitcoin. I noticed to some certain extent, I just don’t know everything and I just don’t know what everyone is doing to get bitcoin but there are people that are doing online forex trading. Those people they’ve got access to bitcoin.

There are people that are doing anything to do with online stuff. They can actually get paid their money in, in bitcoin. And other people are investing, are doing online investments and people do quite different things. Like in my case, I do some sort of work online, my affiliate marketing that I do, I just prefer to get paid in bitcoin. That’s what I do. It may be different from someone else. Myself, I do affiliate marketing with others, I really don’t know what they do to get bitcoins. Yeah, yeah.

Other any things that are missing here that we we and I mean, the western world in that way could support you like that more people might use bitcoin, maybe you are more people are educated, or what do you think is needed, that people not only feel the pain, but maybe also proactively realize, okay, there’s something I can use it.

Okay. So, what I’ve seen, what I’ve seen the western world doing, I’ve seen the western world expanding their businesses into other countries into different countries using bitcoin because in countries where there are cash restrictions, they can actually expand they’ve been expanding their business and accepting bitcoin as a form of payment. So what it simply means is, let’s say I need this service from another country, I can pay that service with bitcoin.

The point is a business can actually be set up and accept Bitcoin as a form of payment..

Is there anything that you would like to tell people in other parts of the world about bitcoin or about anything? Yeah. What do you want to tell people?

Okay, basically, I have good two messages maybe to our people in African nations. Bitcoin comes with great rewards and it comes with a huge risk at the same time, and you should understand them and be prepared for them. Okay? What I mean is, someone can actually buy bitcoin to hold and they’re just hoping for it to keep on increasing, but one of these days it loses value and that’s a risk that you have actually taken. And you can buy bitcoin today and tomorrow, the value goes up. That’s a reward that you’ve actually gotten. So you should be ready for both the risk in the reward and you should actually understand them. And another thing that I would say is before you use bitcoin make sure you educate yourself with the basic knowledge of how bitcoin works before you start doing anything with regards to the bitcoin. And then to the western world: My message is, well, people need awareness and understanding of what Bitcoin is, so that they start appreciating it. I would say that’s it.

Okay, great. Thank you very much.

And now a short word from my sponsors:

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So now you have heard from two bitcoin pioneers in Zimbabwe – I am going to answer a question from a listener of my podcast.

Hello Anita, I wanted to ask a very basic question. I’ve only just stumbled upon your visit to bitcoin, your bitcoin experience in Zimbabwe, in Harare, and Botswana? Now, I just wondered if you could please just help me to understand how this can be applied in a very basic, basic fashion in a rural area where there is difficulty getting commodities, but there are a lot of industrious people who are very industrious in the sense of farming. How can this bitcoin be of a unifying monetary system for everyday use. Please can you respond to that? Thank yo

Hello, thanks for your thoughtful question. Yes, I can see some use cases of bitcoin for communities in rural places, too.

For instance you can use it as a store of value.

Although I understand that it might be difficult to save, when people need all the income they have for food and basic things, the community could save money for the longer term with it. You  do not have to buy a whole bitcoin to save it, you can start with a fraction of a bitcoin. If your local currency is more volatile than bitcoin or is in inflationary mode, then this could be an idea to save your money in the long term. 

Another use case is sending money inside and outside of the countryto buy machines or for remittances. Bitcoin is a global money, there are no borders or restrictions for sending or receiving it. If the community needs new machines or a borehole, then it is possible to pay for that abroad with bitcoin. If the community wants to sell its products, it can receive bitcoin, too. There is no bank approval needed, you’ll have less transaction costs and the payment is settled much faster than in the traditional banking system. 
You could use bitcoin inside the community as a medium of exchange. Or you change it to USD, or to airtime for your phone with a service like Bitrefill bitrefill.com or you exchange directly to local currency with another person over a platform called LocalBitcoins.com. As I assume that people in rural communities currently exchange money like USD, Rand or Pula to local currencies, too I am sure people will find a way to exchange bitcoin as well.

The basic things you need for a start:

  • An internet connection to install the wallet and for the moment in which you want to send bitcoin and for a short moment to see if you have received bitcoin.
  • Install a bitcoin wallet like the Blockstream green wallet on a mobile phone. https://blockstream.com/green/
  • Write down the password for the wallet on a piece of paper. It’s 12 or 24 English words (called “seed” or “backup,” you’ll get that inside the wallet software).
  • Write down the words in the given order
  • Store this paper safely! Do not cut it in pieces and store the pieces in separate places. You then have more places to look after and to secure.
  • The person who knows the seed can access the funds. That is why it is so important to store it safely and with a person in the community that you fully trust. There are ways to secure funds to be administered for more than one person at the same time, called multisignature. But I would recommend that for experienced users only.

You are ready to go. For receiving your first bitcoin you’ll send someone your bitcoin address. You can find that inside your bitcoin wallet. The other person uses it to send bitcoin to you. That’s it. It works the same way round. If you have funds in your bitcoin wallet, you only need the bitcoin address of the receiver and can send the money.

I hope my answer is helpful for you. You can ask me anything you want on the episode page at https://bitcoinundco.com/en/africa3 and I will answer in the next episodes.

In the next episode you will hear the complete interview I did with the teacher from Harare. You have heard her already in episode 1 and 2. We will talk about how bitcoin could be adopted in Zimbabwe and what else is needed to make Zimbabwe rise and shine again.

If you like my show please subscribe to it in your podcast player and share the episode on social media. 

If you are a german speaker and want to start using bitcoin, then I recommend my book to you – it gives you a comprehensive jump start into becoming a bitcoin user, with recommendations and safety tips. You can buy it on Amazon or if you prefer to pay with bitcoin and lightning drop me a message at hello (at) anitaposch.com. 

I am currently looking for new sponsors, so pls feel free to send me a message, too.

For new updates and education regarding the use of bitcoin please follow me on Twitter @anitaposch and subscribe to my newsletter at anitaposch.com/newsletter – posch with a c.

Music: “Start with yes”, Delicate beats, editing by Adam B. Levine and the Coindesk podcast network,  Idea, content and production: yours truly Anita Posch

Listen/subscribe to the CoinDesk Podcast feed for unique perspectives and fresh daily insight with Apple PodcastsSpotifyPocketcastsGoogle PodcastsCastboxStitcherRadioPublicaIHeartRadio or RSS.

Digital Custodian Anchorage Adds XRP Storage for Institutional Customers

Digital custody provider Anchorage has added custodial support for XRP, the company announced in a Thursday blog post.

XRP is the third-largest cryptocurrency by market capitalization, and is best known as the crypto used by Ripple for cross-border payments. Prior to Thursday, XRP was the only top-three cryptocurrency not supported by Anchorage, which specifically caters to institutional investors.

Anchorage began supporting XRP on its website formally on Wednesday, its website showed.

“As the third largest digital asset by market cap, XRP appeals to a number of our institutional clients, which include VC funds, family offices, hedge funds, and other large-scale crypto investors,” Diogo Monica, president of Anchorage said. 

In a press release, Anchorage said that “an ecosystem of institutions” are already holding XRP.

XRP joins 18 other digital assets already supported by Anchorage. Monica said that Anchorage is willing to add custodial service for any digital asset that meets the bar. 

“Anchorage has always aimed to support every asset that meets our standards of quality and security, and XRP does both. Particularly during these uncertain times, we’re proud to be growing our list of supported assets and improving operational efficiency for our institutional clients,” he said.

Disclosure Read More

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Factom Faces Liquidation After Investors Refuse Request for More Funding

One of the first companies to host a token sale, Factom, has notified creditors that it has entered receivership after an appeal for additional funding fell on deaf ears.

Factom Protocol, which raised $140,000 in bitcoin through the sale of “factoid” tokens, said on March 31 it had begun the process of dissolution, according to a London Stock Exchange announcement from largest backer FastForward on Thursday.

“[FastForward] has been notified by the directors of Factom that in a board meeting on 31 March 2020 they concluded that, in the absence of further funding, they now needed to begin the process of assignment of assets for the benefit of creditors,” reads the statement.

Although Factom’s Twitter page had fallen silent in the middle of January, alarm bells started ringing in March after the company told investors it would enter liquidation by the end of the month unless it received additional funding.

FastForward, which had the largest stake in Factom, said it was prepared to renegotiate its $6 million simple agreement for future equity (SAFE) to try and attract outside investment. Although it was willing to participate in another investment round, FastForward told Factom directors that it was not prepared to lead. Previously announced talks with investors were also unsuccessful.

Following a board meeting on March 31, Factom finally told investors it would begin the process of liquidation. As its biggest investor, FastForward is now receiver and will take the lion’s share of the company’s assets and intellectual property. A timetable for when Factom will eventually be wound up has not been disclosed.

Based in Austin, Texas, Factom started in 2014 as a trustless data-provenance layer on the Bitcoin blockchain. In the ensuing years, it announced high-profile partnerships and grants with government agencies, including the Department of Homeland Security, to secure or verify data.

Just last year, Factom said it was participating in a trial by the U.S. Energy Department to use blockchain technology to protect the country’s power grid. The company also released its own ‘PegNet’ stablecoin network.

FastForward, which is listed on the London Stock Exchange and has invested in a diverse range of tech startups, entered into a $6 million SAFE with Factom in 2018. In its near-six year history, Factom raised more than $18 million from investors.

In an announcement, FastForward director Ed McDermott admitted they were not altogether certain how Factom ended in such dire financial straits.

“We are extremely disappointed with this news from Factom,” he said in a statement. “As we go through the Receivership process and understand more of the events that led to this position our position as investors in Factom is expressly reserved.” 

CoinDesk approached both Factom and FastForward for additional comment,but did not hear back by press time.

Disclosure Read More

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Binance’s CoinMarketCap Acquisition Is a Bet That Crypto Really Is for the Masses

Binance just bought the top of the funnel.

The largest cryptocurrency exchange by market volume has acquired popular data site CoinMarketCap (CMC) for an undisclosed price, the companies announced Thursday. Binance CEO Changpeng “CZ” Zhao told CoinDesk the deal closed March 31, although a verbal agreement had been reached “a few months ago.” 

With its extensive (although often questionable) data on prices, volumes and other metrics for 5,290 cryptocurrencies, CMC has served as a dragnet for retail investors since its launch in 2013. 

“It’s a really good website and I think we can help grow it further,” Zhao said in an interview Thursday, adding he had no immediate plans for CMC. Zhao said the domain will remain independent from Binance under a holding company, perhaps staving off concerns over potential conflicts of interest.

Industry veterans told CoinDesk they see a future where CMC could serve as a marketing channel for Binance, steering prospective customers toward the exchange. Zhao, on the other hand, characterized it as a simple, albeit large, purchase of a cash-flow positive asset. 

“It’s by far the largest we have done so far,” he said of the deal.

The acquisition shows that while many firms looked to institutional players as crypto’s messiah in 2019 and even today, Zhao is pinning his hopes on a mass audience of individual investors after buying the most heavily trafficked website in the space.

Amazon’s Alexa ranks CMC as the 570th most visited website globally in the last 90 days. That’s compared to Binance and rival exchange Coinbase at 1,688 and 1,562, respectively. The next closest data provider is CoinGecko at 7,350.

Zhao’s purchase also caps CMC’s journey, from a scrappy outfit run out of founder Brandon Chez’s apartment to a property coveted by an industry leader. In fact, Zhao said he had pursued Chez for years. With the sale, Chez is stepping down.

“CMC was not for sale,” CMC interim CEO Carylyne Chan said in an interview. “Opportunity came along.” (Chan now joins Binance.US CEO Catherine Coley as one of two female chief executives running firms connected to the exchange in a historically male-dominated industry.)

Earlier this week, The Block reported that the acquisition was in the works, and put the price tag at $400 million in cash and stock options, citing unnamed sources. Founders and investors interviewed by CoinDesk gave differing opinions on the plausibility of the figure; some said it sounded too high, others thought it was too low. While both Chan and Zhao declined to give actual figures for the acquisition, citing non-disclosure agreements, Zhao confirmed it was Binance’s biggest acquisition to date.

“CoinMarketCap has more users than any other product in the crypto space,” Zhao said. “Even though their money generation mechanism is not as strong as Binance, they do have the users – it’s a very valuable platform.”

Early talks

Earnest conversations between CoinMarketCap and Binance date back to the data provider’s conference for investors in November 2019, said Chan.

CZ hinted at the coming acquisition, along with one other unannounced purchase, in a New Year’s Day blog post. Binance bought nine separate entities last year alone and plans to onboard 180 fiat currencies by the end of 2020 in an aggressive push to sign up retail customers. The company’s tagline is “exchanging the world.”

It’s easy to see, then, why CoinMarketCap’s status as the first landing page for retail investors would be attractive to CZ despite his past criticisms of CMC for its data quality.

If reports about the price are true, the deal stands as one of the top M&A deals in crypto history. Circle, now a shell of its former self, purchased Poloniex for $400 million in 2018 but has since spun off the exchange and pivoted to focusing on stablecoins.

For CMC, the acquisition follows a ride through choppy waters. The firm quickly became both the dominant data source and go-to platform for asset pricing in the nascent industry. 

It also became a lightning rod for controversy after a 2019 report to the U.S. Securities and Exchange Commission (SEC) by digital asset manager Bitwise found artificial trade volume from 95 percent of the crypto exchanges that provide data to CMC.

Startups such as Nomics, Messari and CoinGecko seized the Bitwise report to chip into CMC’s lead, particularly among institutional investors, which require robust data and can’t expose their clients to manipulation.

Competitors react

Rival exchanges reacted with mixed emotions at news of the deal, which could firmly outdistance Binance from the pack.

Lennix Lai, director of financial markets at OKEx, said it was good to see such large M&A deals in the context of a “bearish market in crypto.”

Big players investing back into key infrastructure is healthy for crypto, Lai said, even if warranting skepticism.

“People might have doubts about whether or not CMC could maintain its independence afterward. It’s fair. But I think we should give the team a chance,” he said. 

Andy Cheung, former chief operating officer at OKEx and founder of crypto derivative platform ACDX, was more critical in his assessment. 

The acquisition “is not very good for the industry” given the conflict of interest between the parties’ missions, he said, pointing to Binance’s exchange token, BNB, as an example.

“I can understand the business or potential profit,” Cheung said. “But honestly, how are you going to convince people that the rankings and volume are true when you’re operating an exchange and also probably the biggest holder of BNB?”

Cheung even saw it as a blow to CZ’s cult of personality.

“CZ has been telling everyone, ‘We are not here for the money and building something bigger and meaningful for humanity.’ Now I’m disappointed, I hope I am wrong and he has a better reason behind” the purchase, he said.

One Silicon Valley crypto investor speaking on the condition of anonymity doubted the reported $400 million buyout figure and said the overall deal “feels like a favor” to CMC founder Chez. 

“The founder is very stealth and I think has the majority of the cap table. And he’s struggled to monetize for years,” the investor said.

That’s not to say Binance doesn’t have loose change to throw around. Two sources said Binance is “flush” with cash, with one pointing toward futures trading customers departing BitMEX following a critical error on March 12 as a recent boon.

Big data, small markets

CMC sits in an awkward spot after its acquisition. 

Although it is typically the first port of call for small retail buyers, institutional investors spurned the website, particularly after Bitwise’s SEC report. At the same time, CMC has some of the best data in the industry because of its sheer volume: exchanges have always used CMC, so why change now?

Nomics founder and CEO Clay Collins told CoinDesk that a certain degree of trust is necessitated between an exchange and a data provider; trust that “is likely to be eroded here” with CMC under the same roof as Binance.

If rival exchanges feel threatened by the possibility of Binance harvesting data from CMC, those firms will be “much less willing to provide low-latency and high-granularity data,” Collins said.

“That data is now being given to a competitor with surveillance abilities. It’s unlikely that other exchanges will want to see Binance aggregating and monetizing their own data,” he said. 

Collins’ concerns were seconded by Alexei Andryunin, head of Gotbit, a Russian token and exchange promotion service. That’s a polite way to describe the business, which Andryunin has candidly admitted inflated volumes on CMC for small-cap coins via wash-trading bots.

In Andryunin’s view, the purchase will provide Binance with “data on all their competitors, plus some of the best expertise for traffic generation in the crypto industry.” 

However, leveraging or altering data would be equivalent to sending the investment to a burner address, Andryunin said. “Binance is incentivized to keep this service transparent so that they don’t lose their investment. I think they’ll try to preserve CMC’s reputation.” 

He also said that CMC’s summer 2019 capitalization was estimated at $650 million, suggesting the reported $400 million offering was a bargain.

Maturation

Binance aside, CMC’s Chan said data concerns continue to be a key part of the firm’s focus. 

The firm is launching both “qualitative data as well as quantitative data” features in 2020, Chan said. “Stronger agreements” could be put in place to “protect [exchanges’] interest as well,” she acknowledged.

“In a sense, it’s in our interest to continue to be neutral and to be transparent and independent,” Chan said. 

Zhao acknowledged CMC’s shortcomings, saying the firm “needs to resolve” numerous issues and “make the product better over time.” That responsibility falls to Chan and her team, though, he said.

“I’m not dictating it,” Zhao said.

Meanwhile, the purchase frees up elbow room for other data aggregators, particularly on the institutional side of the market, said Messari co-founder and CEO Ryan Selkis. In an email to CoinDesk, and in his own newsletter and Twitter feed, Selkis described the buyout as a win for everyone, including data companies that won’t receive a check.

“It’s great news for other crypto data companies, and information businesses. Audience and influence matters. Quality data matters,” he said in a company newsletter.

Yan Liberman, principal at research and consulting firm Delphi Digital, said these larger acquisitions are good for the sector and show overall maturation. He added that it’s best to wait and see on Binance’s relationship with CMC after the deal closes rather than cast stones early.

“The initial reaction might be to look at other data providers/platforms as comparables, but because of all the nuances/differences among them, I don’t think it’s very useful to do that until we get a better understanding of what the plans are for CMC,” Liberman said.

Not much will change for CMC once the acquisition takes place, Chan said. All of the firm’s 40 employees – minus Chez who will stay on as an advisor – will join the 930 person Binance staff, Zhao said.

Chan said the firm will continue to alter its infamous advertisement structure, but will still host paid-marketing for other exchanges.

Since the firm will operate separately from Binance, CZ will have to dish out more money if Binance wants to advertise on CMC, she said.

For his part, Chez – the sole shareholder of CMC – walks away from crypto with a big chunk of change in his pocket – fiat or otherwise. Chan said Chez’s focus remains on his family during the coronavirus crisis and subsequent quarantine he and his family currently live under. 

“We would love to keep him, but he wants to take a break and, given the size of the deal, it makes total sense,” Zhao said.

Zack Seward, David Pan and Anna Baydakova contributed reporting.

Disclosure Read More

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Bitcoin Enters Historically Strong Quarter With 3% Price Gain

View

  • Historical data suggests bitcoin could put in a positive performance in the second quarter.
  • Bitcoin is currently trapped in a pennant pattern on the daily chart. A breakout will likely yield a rally toward $8,000.
  • A pennant breakdown would put the bears in a commanding position and open the doors to $5,000.

Bitcoin kicked off the historically strong second quarter on a positive note, scoring gains overnight despite further losses on Wall Street.  

The top cryptocurrency by market value rose 3.5 percent from $6,420 to $6,650, having closed Q1 2020 with a 10 percent loss, according to CoinDesk’s Bitcoin Price Index.

The cryptocurrency remained bid even as the U.S. equities began Q2 on a weak note with the S&P 500 falling 4 percent. Investors shunned risk as President Trump’s stark warning on the coronavirus pandemic raised the specter of a prolonged shutdown and deeper economic recession.

Bitcoin printing gains amid the risk-off action in traditional markets is a welcome change for observers who believe the cryptocurrency is a haven asset like gold. The cryptocurrency largely tracked the S&P 500 in March as fears of a coronavirus-led recession triggered a global dash for cash.  

Bullish season

Historical data shows bitcoin has put in a positive performance in six out of the last eight years, as seen below.

Sellers had an upper hand in the second quarter of 2013 and 2018, but the losses were restricted to single digits. The 161 percent rally seen in the second quarter of 2019 is the third biggest quarterly gain on record.

Many analysts are of the opinion that the massive money-printing efforts recently announced by global governments and central banks amid the Covid-19 crisis could boost bitcoin’s appeal as an inflation hedge.

And, while it’s far from certain, the mining reward halving– the programmed-in 50-percent reduction in rewards for bitcoin miners due in May – may put upward pressure on prices. “A bitcoin emission cut of 50% is a fundamentally bullish even,” said Connor Abendschein, Crypto Research Analyst at Digital Assets Data.

So bitcoin may repeat history by ending the April to June period in the green. Gains, however, may remain elusive if stock markets see another massive price sell-off, again triggering a liquidity crisis like we saw last month. In that case, investors will likely stay away from the crypto markets.

With the virus outbreak showing no signs of slowing down, the possibility of a deeper stock market crash shouldn’t be ruled out. “The impact of the coronavirus on economies will not be over quickly because there’s been a lot of damage. A gigantic amount of debt has been added and another stock market rout looks imminent,” said veteran investor Jim Rogers.

From a short-term perspective, the cryptocurrency appears on track to extend the recent rally from lows under $4,000.

Daily chart

Bitcoin has created a pennant pattern on the daily chart, which comprises of trendlines connecting higher lows and lower highs. Pennants are considered continuation patterns, meaning they tend to accelerate the preceding bearish or bullish move.

In this case, the pennant has appeared following a rise and could end up paving way for further gains.

A high-volume UTC close above $6,750 would confirm a pennant breakout and open the doors to a re-test of highs near $8,000 seen on March 12.

The outlook, however, would turn bearish if the pennant is breached to the downside. In that case, more sellers may join the market, pushing prices down to $5,000.

Disclosure: The author holds no cryptocurrency at the time of writing.

Disclosure Read More

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Crypto Wants Stronger Public Response to Coronavirus, CoinDesk Survey Shows

In times of crisis, people look to their government – or, at least, they want to. 

They may not have actual faith in the state’s capacity against a pandemic. But many of us want to believe there’s someone with a higher plan. 

Coronavirus is a test of our faith and trust in government. Can we rely on our leaders in an hour of need to make the right calls and procure the necessary ventilators and PPE? Or, are we better off building a bunker in the yard with a 10-year supply of ravioli? 

People in crypto are known for their libertarian, anti-state bent. The stereotypical bitcoiner got in out of disdain for state power. Even if many in the blockchain industry don’t fit the stereotype, it’s probably true that the community tends self-reliant and self-executing. Generation Crypto is all about e-empowerment: the ability to control and manage one’s life via code and a screen. 

But even crypto looks to government in a crisis like the one we’re now experiencing. According to a new CoinDesk reader survey, strong majorities are in favor of unusual government measures like enforcing social distancing, stopping travel and telling corporations what to manufacture.

“People want to believe the people in charge know what the fuck they’re doing. And because crypto people are so cynical, they assume they can’t trust the government. But they still want it to be competent,” said Maya Zehavi, founder of an un-launched crypto startup and the Israeli Blockchain Industry Forum, said in a phone call. 

As the COVID-19 outbreak takes hold, governments are re-asserting themselves in the chaos and confusion, sometimes helping, sometimes making things worse. Decisions to lock down cities, flood the economy with cheap money, and clear the streets of people not observing distancing rules are all being taken by governments, not individuals.

CoinDesk asked readers to get hard data about how the crypto community – if that is a sensible term – feels about these measures. 

In an informal survey, we aimed to test the association between holding crypto, political affiliation, and readers’ approval of how governments are handling the novel coronavirus pandemic. 

So how are governments handling this? The overwhelming answer: not well. Though not for the obvious reasons that a type-casted bunch of libertarian tech bros would lead you to believe. These advocates for decentralization want a stronger governmental response, financial support for the vulnerable, and clamp downs on travel. 

A note about the survey

With a limited sample size of approximately 575 respondents, who discovered the survey primarily on social media or in CoinDesk’s newsletters, our findings should not be taken as conclusive. 

Respondents were self-selecting and not asked to reveal biographical information – such as age, sex, or residence. Instead, CoinDesk opted to test the temperature of the “generation crypto,” seen as a global movement fastened by a belief that decentralization is the future. 

The survey may capture a percentage of general interest readers and crypto stakeholders, though “there’s likely a small but vibrant contingent of people into crypto who simply don’t follow ‘the news,’” Quinn DuPont, Assistant Professor in the School of Business at University College Dublin, said in an email. 

The results

From this modest sample size, it’s clear that the early libertarian or anti-statist mentality of crypto has shifted. According to the survey, there are nearly as many self-identified social democrats (16.4 percent) as libertarians (17.5 percent). Though, in aggregate, right-leaning dispositions eked out a majority of those surveyed at 41 percent, ahead of 35 percent of respondents with left-leaning political persuasions. 

This follows CoinDesk research from July 2018, showing an influx of new users during the 2017-18 ICO bubble led to a “large social transformation” in crypto. “[R]ather than crypto changing them, they changed crypto,” DuPont said. “The punk ethos of early Bitcoiners has largely been replaced with a much more commercial ideology.”

cryptoinvestorscoronavirussurvey_cryptoholderpolitics_april1_coindeskresearch
Source: CoinDesk Research

With this in mind, it’s not surprising that a vast plurality of respondents see government intervention during the crisis as a necessity. Seventy-one percent of respondents agree or strongly agree that national governments should command factories to begin producing essential goods during the COVID-19 outbreak. 

In times of war, in deep crisis, politics stops.

This would include, theoretically, measures like enacting the Defence Production Act, an order that empowers the U.S. executive branch to direct manufacturers to produce equipment like face masks and ventilators. 

Vinay Gupta, CEO of Mattereum, sees this as flying in the face of traditional libertarian sensibilities, which would prefer to see production ramp up in response to a natural increase in demand.

cryptoinvestorscoronavirussurvey_travel_april1_coindeskresearch-1
Source: CoinDesk Research

Similarly, nearly 80 percent of respondents agree or strongly agree that social distancing, or measures taken to restrict when and where people can gather, should be put in place. Seen from the opposite direction, 73 percent believe people shouldn’t be allowed to travel freely during an infectious outbreak. 

In ordinary times, this would be a gross encroachment on civil liberties. However, “in many ways, in times of war, in deep crisis, politics stops,” Carsten Sorensen, Associate Professor of Information Systems and Innovation, said in a phone call. “Many of these self-assigned political distinctions may fail to account for basic human response.”

shutterstock_1675328329
A healthcare worker collects a coronavirus sample. (Credit: Shutterstock)

That isn’t to say crypto is abandoning its principles. “You can argue sensibly that people who believe in crypto are people that strongly believe in collective action. They just believe in a different practical application than a state-based model,” Sorensen said. Open source and public cryptography are “deeply democratic ideas,” he said, after viewing the data. 

Nouriel “Dr. Doom” Roubini, professor of economics at New York University’s Stern School of Business and frequent crypto critic, vehemently disagrees. “[Crypto advocates are] total hypocrites pretending to want a decentralized anarchic libertarian world where there is no government, no Fed but only private [unflattering euphemism for alt coins],” he said in an email.

[Crypto advocates are] total hypocrites pretending to want a decentralized anarchic libertarian world where there is no government, no Fed..

“But now that 3,000 [tokens with dubious propositions] have fallen down by 99 percent they expect a welfare check from the government,” he said.

cryptoinvestorscoronavirussurvey_assistance_april1_coindeskresearch
Source: CoinDesk Research

While an overwhelming majority of respondents call for government assistance paid to individuals and businesses, more than 50 percent think their government has already failed to appropriately respond to the dual economic and health threats of COVID-19.

cryptoinvestorscoronavirussurvey_economy_april1_coindeskresearch
Source: CoinDesk Research

This may be rooted in the sense that some governments have prioritized the economy over human life, which 68 percent of respondents think is the wrong approach. 

Complications out of convenience

Sorensen broke the data into convenience charts, which show tendencies within a political grouping, over and above what could be expected based on a random distribution. He found that “decentralized ideologies,” understood as libertarians, anarcho-capitalists and political nihilists, and “centralized ideologies,” which includes liberals, conservatives and centrists, tend to disagree. 

Questioned whether governments should prioritize the economy when developing a COVID-19 response, “Decentralists strongly agree and are neutral,” while “centralists strongly disagree.” This is also the case in approval of more local responses to the crisis, where decentralists strongly disapprove, while centralists strongly approve.

cryptoinvestorscoronavirussurvey_economy_centraldecentral_april1_coindeskresearch
CryptoInvestorsCoronavirusSurvey_Economy_CentralDecentral_April1_CoindeskResearch
Source: CoinDesk Research

“Covid is essentially a test in governance and trust,” Zehavi said. “The government’s response in some ways is a lot more centralized than I think the crypto community would be happy to have.” 

“There’s something very contrarian to what’s happening as part of the COVID response and what crypto has been advocating for,” she said.

SEC Seeks More Feedback on tZERO’s Proposed Security Token Exchange

The U.S. Securities and Exchange Commission (SEC) is extending the timeline for it to approve or disapprove operations by a security token exchange affiliated with Overstock’s tZERO.

In a letter dated April 1, the SEC presumably wasn’t joking when it said it was looking for analysis and input on the BOX Options Exchange’s proposed rule changes to commence operations of its new Boston Security Token Exchange (BSTX).

BSTX, a joint venture between BOX and tZERO, filed rule change proposals detailing its operations last year. BOX more recently filed an amendment to one of its proposals, increasing the number of market makers and heightening its listing standards.

In Wednesday’s document, touching on one of these proposals, the SEC said it specifically wants feedback on whether the proposed exchange’s operations are consistent with parts of the Securities Exchange Act of 1934, as well as whether the information it has provided so far are sufficient to make a ruling on approval.

The commission warned that if not adequately addressed, these hurdles would be grounds for disapproval.

Third parties can weigh in on the proposal either online or by emailing the SEC (those who email should include “File Number SR-BOX-2019-37” in the subject line). They have three weeks from the document’s publication in the Federal Register to submit initial thoughts, and a further two weeks to offer any rebuttals to others’ comments.

“The Commission asks that commenters address the sufficiency of the Exchange’s statements in support of the proposal, which are set forth in the Notice,72 in addition to any other comments they may wish to submit about the proposed rule change,” the document said.

Headwinds

A number of concerns have been raised around the BSTX proposal by third-parties. On March 27, Nasdaq Senior Vice President Joan C. Conley wrote a letter to the SEC raising concerns about how the proposal placed an “unreasonable burden on competition” due to the underlying blockchain technology (distributed ledger).

Conley stated the technology used to track ownership of the security token would not share a common distributed ledger. Instead, BOX would be the sole user, retaining exclusive ownership that would place other exchanges at a competitive disadvantage.

“The most salient characteristic – indeed, the only unique characteristic – of the security token is its use of blockchain technology,” Conley wrote. “To avail itself of blockchain technology, the purchaser must be a BSTX Participant. Non-BSTX Participants would be subject to ‘omnibus’ blockchain reporting.”

This would in effect allow BOX to promote trading of some securities in its own favor because other exchanges would be unable to trade these tokens, she wrote.

The New York City stock exchange also questioned what it saw as insufficient detail relating to digital securities infrastructure and its compatibility with existing equities market infrastructure as well as the impact on anti-fraud, customer protection and possible investor confusion.

“Nasdaq recommends that BOX submit additional detail addressing these concerns before the proposal is approved,” the exchange said.

Market Impact

The comments follow other concerns expressed by David Shrader of the Paykin Krieg & Adams law firm, Ellen Greene with the Securities Industry and Financial Markets Association (SIFMA) and Benjamin Connault of the IEX stock exchange, among others.

Greene and Shrader both indicated that the filing documents around the exchange had not been widely disseminated to the broader securities market. All three wrote that more time is needed to consider the proposed rule changes.

In her letter, Greene wrote that “SIFMA remains concerned that approval of the collective filings could be a significant change for the equities markets,.”

Shrader, writing on a client’s behalf, went further, saying that BSTX needs to provide more clarity around how security tokens would settle, how market participants would verify ownership of a security token in compliance with know-your-customer and anti-money-laundering rules, as well as a number of other issues. 

Indeed, BSTX needs to clarify why a blockchain-based exchange would be superior to a traditional one, he wrote.

“It seems likely that the introduction and use of ‘Security Tokens’ will create undue burden on market participants, exchanges, custodians, clearing firms, retail and institutional investors,” Schrader wrote.

Disclosure Read More

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Looking for a Halving Payday? Quick Wins in Investing Are Rare

Osho Jha is an investor, data scientist and tech company executive who enjoys finding and analyzing unique data sets for investing in both public and private markets. 

Many bullish investment theses for bitcoin are grounded in expectations that the upcoming halving of block rewards will cause the BTC price to increase. Previous supply constrictions,  from 50 BTC to 25 BTC and 25 BTC to, where we currently stand, at 12.5 BTC, have had that effect. Still, given the rare nature of these events, our data points are limited and increase the anticipation and speculation around upcoming halving some time in May 2020.

There are many great pieces on the mechanics of a BTC halving and how they were described in the original white paper and subsequently coded into the structure of bitcoin. So I will assume familiarity with these concepts going forward as we try to understand the supply constriction narrative of the halving thesis. 

Unfortunately, many investors are pointing to the halving as a catalyst for a price increase in the face of a difficult bitcoin market, which has had three straight quarters of negative returns, and have set sky high expectations for what sort of price action we may see after. I certainly believe that the halving will have a positive impact on price, but I am concerned by investors expecting parabolic gains in the fashion of 2017.

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Bitcoin during previous halvings. Source: Coin Metrics

As it currently stands, the bullish thesis around the halving is that as block rewards get cut in half, the number of miners able to sustain their operations will decline. Since fewer BTC are being brought into circulation, there should also be some reduced sell pressure as miners often sell BTC to fund operations in their local currency. One could then conclude that the supply constriction will allow the price to appreciate. 

While I generally believe this thesis to be sound, I think it hinges on the assumption that a drop in block rewards will force miners offline, and that demand for bitcoin will not decline and this merits further analysis.

Miner Breakdown

Mining is a difficult game of balancing BTC inflows with fixed cost outflows of hard dollars. Their most prevalent cost is electricity. In order to cover this cost, miners sell BTC, creating a consistent sell pressure in the market.

Next-gen miners are more efficient on a hashes-to-electricity-consumption basis helping alleviate some of concerns around electricity cost. According to recent research piece by BlockWare Solutions, a large distributor of mining rigs in North America, roughly 62 percent of miners are using new-gen miners (the Bitmain S17 and up) and 38 percent are using old-gen miners (the Bitmain S9 and below). The table below, from BlockWare Solutions, shows a breakdown of the mining landscape based on their internal data, which has insight into 20 percent of the total hash rate on the network.

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From research by BlockWare Solutions

I believe the recent downward price action has already caused a miner capitulation, which is reflected in the recent drop in hash rate and the compensating downward adjustment of difficulty. At current bitcoin prices (roughly $6200), 19 percent of bitcoin miners are operating at a loss. With the halving being a doubling of break-even price, we can see that roughly an additional 38 percent  of miners will join them. That’s roughly 57 percent of the market in. And while that constitutes a majority of the hash power, the reality is that miners can and often do operate below break-even prices. To sustain themselves, they sell bitcoin from their own treasury, adding to the selling pressure.

While the halving will certainly take miners offline, I believe this will be a gradual change as opposed to an instantaneous change. It will likely be preceded by additional selling pressure from miners operating below break-even costs, unless there is a substantial spike in price or consistent decline in difficulty allowing these miners to stay online. 

Price Action as a Gauge for Demand

“Isn’t it priced in?” is the most common question I hear from both short term traders and long term investors. I find this question to be shallow because it is nearly impossible to answer for any asset, let alone one as nascent as bitcoin. Despite the steady press coverage, I feel that the true impact of the halving is not priced in – certainly not outside the core long term BTC holders.

Investing is a matter of patience. The halving will bring a positive impact to price but we should be measured in our expectations.

Current futures price would suggest market participants are unaware of a halving or do not expect it to have a big impact on price with post halving expiry contract trading in line with previous reductions in block rewards.

Historically, bitcoin has had large run ups in the year leading into the halving followed by parabolic gains in the year after.

Mature Markets Require Patience

While this narrative was certainly compelling in the summer of 2019 with bitcoin peaking around $13k, bitcoin is currently up 20 percent on a Y/Y basis. This is still a phenomenal return, especially compared to the -13 percent Y/Y return in SPY – the ETF tracking the S&P 500. Since the returns leading into the 2020 halving are compressed compared to the parabolic returns leading into the past two halvings, the returns after the 2020 halving should be positive but more constrained.

A measured response is in no way a condemnation of the halving thesis. It is the natural evolution of an asset class that is becoming understood by a broader market. Recent price action has been encouraging as the market has been able to absorb the selling pressure created by miners in the face of a large price decline due to a global flight to USD. While the price decline was substantial and primarily driven by short-term holders, the ensuing stability in the $6,000 range is positive and shows that demand for bitcoin has remained strong. With stablecoin capitalizations at an all time high, there is plenty of capital on the sidelines, but as markets mature, a singular, well broadcast event rarely causes outsized impact on price after the fact – certainly not one as talked about as BTC’s halving.

Early in its life BTC traded like a venture investment. Even in 2017, the crypto boom was fueled by a belief that distributed ledger technology would revolutionize all industries and that adoption of digital cash was close. But bitcoin is unique in being both a technology and a representation of strong money principles – digital gold. Its strong money principles are encompassed in a self correcting system incentivizing miners while slowing the rate at which this fixed supply asset is trickled out. I believe we will look back at bitcoin’s third halving and instead of parabolic gains see bitcoin come into its own during a period of global macro distress.

Quick gains usually turn into quick losses. Investing is a matter of patience. The halving will bring a positive impact to price but we should be measured in our expectations. Current actions by central banks around the world have given more positive catalysts to bitcoin than a singular event. Macro trends (such as the debasement of the dollar by the Federal Reserve)  occur slowly and we have yet to see the impact of these events in traditional markets, let alone bitcoin. Patience and measured expectations are key in this market. After all, no asset has rewarded those two principles as handsomely as bitcoin.

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The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

FATF Says US ‘Largely Compliant’ With Virtual Currency Recommendations

The Financial Action Task Force (FATF) has rated the U.S. “largely compliant” with its revised criteria for preventing money laundering and terrorist financing (AML/CTF) through digital assets.

The intergovernmental standards group published its assessment of the U.S.’s compliance with its banking rules, evaluating laws and regulations around digital assets and other areas on Tuesday. 

That’s not to say the U.S. is completely in line with the current “New Technologies” standards, known by FATF as “Recommendation 15,” though. The most powerful member of FATF’s global financial crimes network retains “minor deficiencies.”

For example, U.S.-registered money services businesses need only keep detailed records for transactions of $3,000 or more. That’s three times higher than FATF’s required due diligence trigger, and could, in the watchdog’s view, let bad actors slip through. 

“This higher threshold is not clearly supported by low ML/TF risks,” FATF wrote. 

U.S regulators also lag in their investigation of convertible virtual currency (CVC) businesses, according to FATF. Their strategy “does not specifically identify higher risk virtual asset service providers (VASP),” making their “various” examinations of high-volume exchanges and peer-to-peer networks insufficient. 

“Therefore, it is not entirely clear whether the current approach is sufficiently risk focused, especially since only 30% of all registered CVC providers have been inspected since 2014,” FATF wrote.

Legislative gaps could also allow extremely niche VASP activity to evade detection and enforcement. A U.S.-registered VASP that only did businesses with non-U.S. persons would not, apparently, be subject to current law. 

FATF nevertheless praised U.S. regulators’ recent efforts in the virtual asset space, especially the Financial Crimes Enforcement Network’s May 2019 guidance paper for CVC activity. 

FATF found that the U.S. remains “largely compliant” with Recommendation 15.

Disclosure Read More

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Bitcoin Takes Tumble, Traders Fret Correlation and Next Month’s Halving

Bitcoin and ether are trending down as traditional markets closed in the red Wednesday. 

On a 24-hour basis, bitcoin (BTC) was in the red 4 percent Wednesday afternoon Eastern time and ether (ETH) was down 3 percent. Most other cryptocurrencies were off as well. 

Notable assets down in the dumps on CoinDesk’s big board include NEO (NEO) in the red 5 percent, bitcoin SV (BSV) slipping 4 percent and IOTA (IOTA), down 4 percent. All price changes are in the past 24 hours as of 20:00 UTC (4:00 p.m. EDT) Wednesday. 

In the traditional markets, Japan’s Nikkei 225 index closed down 4.5 percent. Europe’s FTSE 100 ended the day in the red 2.7 percent. In the U.S., the S&P 500 closed New York’s trading day down 4.4 percent. 

Traders continue to have concerns about coronavirus’ impact on the world economy, as the World Health Organization says inflections will surpass one million people causing 50,000 total deaths globally in a matter of days.

After holding steady Tuesday, bitcoin slipped from $6,450 at 00:00 UTC Wednesday to as low as $6,160 around 17:00 UTC on exchanges such as Coinbase. An outstanding question is how long the cryptocurrency will continue to track traditional investments during this period of turmoil.

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Trading since March 29 on Coinbase. Source: TradingView

“Bitcoin tends to have periods of spurious correlation with macro risk, but it is not statistically significant,” said Darius Sit, managing partner at crypto fund QCP Capital. “At the time of market panic even gold was correlated with equities but that is starting to break as well.”

Indeed, gold rallied to start Wednesday, and though it did come under some sell pressure it is up less than a percent on the day as of 20:00 UTC (4 p.m. EDT). 

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Contracts-for-difference on gold since March 30. Source: TradingView

“Gold is one of the best-performing assets in Q1. Gold rose 2.95 percent, which is a great result compared to other asset classes which faced losses,” said, Nemo Qin, an analyst at brokerage eToro. 

Where does crypto go from here? Some think the worst is over after last month’s collapse of bitcoin, which briefly dipped below the $4,000 level March 13. 

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Monthly trading of bitcoin on Coinbase. Source: TradingView

Despite that bloodbath, the first quarter saw bitcoin perform better than the S&P 500 index even though it was still in the red 10 percent for the period. 

“For what it’s worth, we believe the lows are behind us in this new macro regime and that expectations have been heavily subdued,” said Vishal Shah, founder of crypto derivatives exchange Alpha5. “At worst, this should lead to the creation of price troughs not too far from here, and at best, provide sustained fuel for a move higher.” 

Another open question is whether the upcoming halving of bitcoin block rewards will have its usual effect of boosting the price. For one thing, the options market is expressing pessimism about the halving, expected to occur in mid-May. 

In theory, by reducing the amount new bitcoins released into circulation every 10 minutes or so, the halving should juice the price, assuming demand stays constant. But the unusual turbulence, and the way bitcoin has reacted to it so far, calls that assumption into question.

“It’s still a tiny space with low liquidity all over crypto. I honestly have my eyes on hashrate and think a lot about how the halving effect will look this time,” said Henrik Kugelberg, a Sweden-based over-the-counter trader. 

In fact, a large U.S. cryptocurrency miner recently shut off its machines, claiming unprofitability at current price levels. 

Despite all this, some traders still have confidence in crypto, expecting it to decouple from traditional markets at some point whenever things settle. 

“I think when there is market panic and deleveraging going on, it’s normal for BTC as a fringe asset to follow the general trend. But once markets are calmer it can start to move according to its own narrative,” said QCP’s Sit.

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The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.