The Zimbabwean currency’s collapse in 2008 and record hyperinflation are widely seen as textbook examples of what can go wrong with a centralized currency. For instance, some cryptocurrency enthusiasts — as well as opponents of the fiat currency system in general — have routinely pointed to the Zimdollar’s collapse when arguing for an alternative monetary system.
In other instances, entrepreneurs like those behind Zimbocash, a decentralized currency and payments platform for all Zimbabweans, have already launched such an alternative. They hope that this alternative to a central bank-issued fiat currency will demonstrate to all that sound money which enables people to save is still possible.
To learn more about this Zimbocash system, MotleyBloggers.com News reached out to Laswet Savadye, Head of Subscriber Network. Below are Savadye’s responses to questions sent to him via Whatsapp.
MotleyBloggers.com News (BCN): Can you start by telling us what brought about this idea?
Laswet Savadye (LS): We’ve been passionate about sound money. Many in the team have been exposed to Zimbabwe’s first hyperinflation and the pain of money printing, and this was further reinforced with the book When Money Destroys Nations. We are passionate about solving the problems of money printing with sound money. This is the only way for there to be sustainable savings, trade, and wealth creation on a national scale.
BCN: What do you hope to achieve with the Zimbocash cryptocurrency or Zash as it is also known?
LS: Our broader goal is to establish sound money for Zimbabwe — we have created money that is fixed in supply but available to all Zimbabweans. Zimbabwe has an extremely weak currency and banking system, having suffered from hyperinflation and economic malaise. We want to see the economy of Zimbabwe being transformed with sound money.
The goal is for trust to be restored in the money and banking system. The Zimbocash system is based on a decentralized blockchain — a revolutionary technology that enables a fixed supply of money and a reliable payments system.
BCN: Your Head of Corporate Communications, Philip Haslam, recently suggested that Zimbocash is the solution to Zimbabwe’s collapsing monetary and banking system. Does this mean your cryptocurrency will be competing with the local fiat currency?
LS: Zimbcash is not competing with the local fiat currency. We believe there is room for both to co-exist. Zimbocash is not trying to replace the fiat currency, rather it comes in to complement by being an alternative currency that people can use.
BCN: There have been suggestions or allegations that you essentially have two cryptocurrencies, the one that was airdropped to Zimbabwean users and the other one which is listed on the South Korean cryptocurrency exchange, Bithumb. How do you respond to this?
LS: We do not have two cryptocurrencies. We have one and it is publicly available for all to see on tronscan https://tronscan.io/#/token/1002984. Listing on the exchange requires one to put an exchange float that will be used for buying and selling in order to come up with a reference price.
BCN: Still on the same issue, there seems to be some confusion regarding the status of airdropped Zash tokens. For instance, some holders of airdropped tokens claim these cannot be traded on Bithumb. Is this correct? If so, why are you not allowing holders of airdropped Zash tokens to trade these?
LS: As part of that, we need a market price and we need to attract sufficient liquidity on the exchanges to enable cross-border trade. Liquidity grows over time. It is fragile. There have been a few national airdrop systems that failed because they didn’t take the time to build the payments network directly and everyone sold directly on the exchange pushing the price down.
We’ve got to work first on developing a peer-to-peer trading network, and as liquidity grows, we can open the exchange up slowly. As transactions increase, the demand locally for Zash increases. Also, as transactions increase, the demand internationally for a sound money token that has a real peer-to-peer network will grow. These two will result in increased buy liquidity on the exchange and decreased sell liquidity. It is these two forces that will enable us to increasingly open up exchange transfers.
For that reason, we will be limiting the amount that users can sell. We want to see users make appropriate transactions, and we will be carefully monitoring the high-value individuals who have a lot of Zash — we want this to be used in daily trade.
That said, we are pleased to announce that we have opened up transfers to the exchange for users who make the ten most transactions each month. This is a start, our goal is to increasingly open up exchange transactions gradually over time, rewarding those who make transactions.
BCN: Now, the Zimbabwean Finance Minister, Mthuli Ncube, recently made some positive remarks about cryptocurrencies. What are your thoughts on what Minister Ncube said?
LS: The Finance Minister made similar remarks in 2018, when he said “Zimbabwe should be investing in understanding innovations and often central banks are too slow in investing in these technologies.” We remain supportive of the Finance Minister’s remarks.
BCN: In your opinion, do these remarks by the minister suggest that both the government and the central bank are now embracing cryptocurrencies?
LS: It would be great if that was the case. This is currently a new technology and no one else has successfully enabled a blockchain with a fixed money supply for an entire nation so, in many ways, this is an innovative technology. We believe that the government is taking the right approach, i.e. a wait-and-see approach. As the market grows we believe that there will be appropriate engagement and regulation from a point of greater understanding.
BCN: Many central banks in Africa are studying or are preparing to launch central bank digital currencies (CBDC). In your opinion, are central banks capable of issuing a successful or functional CBDC?
LS: CBDCs do not use the principles of blockchain to fix the money supply. These CBDCs will all be linked to global CBDCs and result in the global control of the transaction. In a world where all transactions are digital and governments around the world will resort to rampant money printing. It is a major global risk right now and our goal is to resolve this issue in Zimbabwe by fixing the supply of money using blockchain technology.
Everyone in Zimbabwe — the government, businesses, and ordinary people — should be able to rely on the economic system. Otherwise, the risk is that Zimbabwe gets trapped in a global central bank digital currency system that impoverishes the entire nation.
BCN: Do you see a CBDC as the right solution for Zimbabwe’s currency problems?
LS: In many ways, the RTGS dollar has been a form of a central bank digital currency. The two key issues are, can a CBDC be used to establish sound money where no one can increase the money supply, and can a CBDC be created that isn’t ultimately controlled by offshore powers.
BCN: Lastly, you have been on the ground for some time now. In your opinion, are Zimbabweans ready for digital currencies?
LS: Zimbabweans are more than ready for digital currencies. RTGS dollars is digital and the people have had much-needed practice from using current mobile wallets such as Ecocash and Onemoney. We’re seeing a lot of excitement about the Zimbocash system and we believe we have an opportunity to establish something really unique in the world.
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