eBusiness Weekly
Jeffrey Gogo
In Zimbabwe things financial tend to catch-on rather slowly. But when they do, they do so with a bang. And then as quickly as they emerged, die out unnoticed. Think about the mania over Zvihuta, Matapiri emusaki, Ayini dzesimbi etc! It is a common social trait of the human species, the fear of missing out. They call it FOMO, contemptuously. It is a powerful motivation, particularly on financial decisions.
And nowhere else has FOMO played out more evidently than in the cryptocurrency space in 2017, led by Bitcoin, the foremost digital currency.
The only “pullback” was that the craze took a hold in developed markets, and not here, where virtual money remains somewhat middle class and specialists’ pursuit.
In that sense, it becomes a tough ask to come up with reliable projections specific to the Zimbabwean market, where daily volume remains insignificant and public and merchant buy-in unknown.
Regardless, cryptocurrencies proved irresistible in 2017. A bubble burst? Ponzi scheme?
A fraud? Bitcoin, the “posterboy” of digital currencies, had many issuing warnings. Whatever they thought of it, cryptos made a lot of people rich last year. And yet, others envious.
William Chui, head of cryptocurrency investments at online technology magazine Techzim.co.zw, and a long time cryptos investor, believes Bitcoin will remain attractive in 2018, but the greatest potential lies in altcoins — those coins which are not Bitcoin. And there are over 1 300 of them! Difficult choice.
“What you will find is that the use cases of cryptocurrencies in Zimbabwe right now are limited based on the adoption you are going to have from merchants,” Chui told the Business Weekly this week, by phone.
“It’s the same problem that OneMoney and Telecash have: the network effect. The lack of the network is what causes a lack of widespread adoption for the two mobile money platforms. So, should any cryptocurrencies pick up locally, it will all be determined by the network effect,”he said.
So, if you are thinking of going crypto, we pick up a few coins that could rival Bitcoin in 2018, without putting away Bitcoin itself.
Ripple
Market cap: $147,7 billion
Current price: $3,81 ( Data according to Coinmarketcap.com)
Bitcoin made the headlines in 2017, but it is Ripple (XRP) that reported one of the biggest growth of all cryptocurrencies last year, up more than 30 000 percent, and continues to do so. Since New Year, the coin has raked up over 250 percent in gains, replacing BitcoinCash as the second most valuable digital currency in the world.
Created by former Bitcoin developers Ryan Fugger, Chris Larsen and Jed McCaleb, (lookout for the persons behind the development of the coin you intend to purchase.
These faces could be key to credibility and future of the coin) Ripple’s key selling point is it’s perception as both a currency, but a platform that facilitates payments, Bitcoin included. It’s creators say that Ripple “connects banks, payment providers, digital asset exchanges and corporates. . . to provide one frictionless experience to send money globally.” There is over 100 banks globally connected to its network, but none of them Zimbabwean.
Chui, the TechZim expert, opted for caution. “Ripple might become a conversation, but currently it’s Bitcoin locally,” he said.
“Right now the world is talking about Ripple as the next big thing, but only a handful of Zimbabweans who are following what is happening internationally know about this. I am not too sure whether local banks are aware of its (Ripple) existence and are trying to embrace it to facilitate international transfers.”
Litecoin
Market cap: $12,6 billion
Current price: $231
Created by former Google worker Charlie Lee in 2011, Litecoin (LTC) has often elicited noteworthy descriptions as “the silver to Bitcoin’s gold.:
But the coin has hit the bears since Christmas, falling 40 percent. Litecoin has slipped four places to the 8th most valuable cryptocurrency in the world. The decline coincides with Lee offloading all his Litecoins late December, after a somewhat awkward warning investors needed psyche themselves up for rapid swings in the LTC price, to as low as $20.
Still, Litecoin retains its appeal as a currency built to avoid the pitfalls of Bitcoin, by improving transaction speeds and to encourage everyone to participate in mining of cryptocurrencies.
BitcoinCash
Market cap: $41,1 billion
Current price: $2 431
Like LTC, BitcoinCash has tampered off from nearly $3 000 reached in December. Being a “fork” of Bitcoin — basically a clone that emerged from Bitcoin — BitcoinCash tends to track the price of its parent coin, the ups and lows.
William Chui sees BitcoinCash as a genuine altcoin to lookout for this year, on account of its cheaper transaction fees as well and faster processing times. Its creators say the coin larger block size allows it to process transactions faster at lesser cost, but critics say an increase in block sizes could disrupt the concept of a decentralised currency.
“However, the challenge is going to be adoption, that network effect is what’s likely to slow it down,” Chui cautioned.
“Are you able to make payments with BitcoinCash?
“The hope and anticipation is that the amount of merchants accepting BitcoinCash are going to increase throughout the year. Countries like Japan, which is already treating Bitcoin as a legal currency, will likely help drive BitcoinCash’s growth in 2018.” He added: “Locally, only a few merchants, if any, accept cryptocurrency as a method of payment. That will hinder BitcoinCash’s growth. Golix, (Harare-based digital currency exchange which quotes BitcoinCash), are in the process of allowing people to buy and sell stuff using cryptocurrencies, but that is still at development stage.”
Neo
Market cap: $6,5 billion
Current price: $100
It’s been called the Ethereum of China, and many predict it will rise sharply should the Asian nation relax its stance on cryptocurrencies. Neo was founded in 2014 by Da Hongfei, a huge digital currency proponent in China, and chief excutive of Onchain.
Neo’s supposed twin Ethereum, another Bitcoin offshoot built to “enable developers to build and deploy decentralised applications”, has a global market value of $93 billion. So, Hongfei’s coin has some catching up to do. In 2017, Neo rocketed over 50 000 pecent compared to Ethereum’s 7 000 percent.
Bitcoin
Market cap: $251 billion
Current price: $14 953
The price of Bitcoin has cooled off since testing $20 000 in December when two American exchanges introduced contract sales of the digital currency. There are concerns the currency had overheated and therefore primed for a correction.
Bitcoin has recently dropped to as low as $12 000 but it will be difficult to write off the first born of the digital currencies just yet. This week Bitcoin has picked up more than 20 percent, indicating there is still some steam left in it. The currency rose 1 300 percent last year. It is difficult to see it repeating a feat of similar strength in 2018, but expect some modest growth. While acceptance as a method of payment as well as legal currency is growing, Bitcoin’s biggest undoing will be its high transaction costs.
“What would help Bitcoin to increase locally is Bitcoin itself because when cryptocurrencies are talked about it is Bitcoin pushing that conversation,” William Chui, told the Business Weekly.
“For this to happen, the network effect (has to go), when more merchants start to accept Bitcoin as a means of payment. However, the problem we have with Bitcoin now is the high transaction costs. For example, a few days ago I tried to move $7 worth of coins from Coinbase (a US-based cryptocurrency exchange) and was quoted $31 transaction fee to move that amount,” he said.
Chui added: “A lot of people are also complaining of the high transaction fees. So, for people in Zimbabwe who want to make micro-payments Bitcoin is not the best option. Broadly, most investments into Bitcoin by Zimbabweans today is speculative, people intent on safeguarding their money.”
Disclaimer: Views expressed in this article should not be used as a basis for making investment decisions in cryptocurrencies. Every investment has its own risks. Do your research thoroughly before investing in cryptocurrencies.
