When Tatenda Mabungu founded Styx24.com (pronounced Sta-i-x) last September to rival Golix.com — until now Zimbabwe’s only cryptocurrency exchange – he had already made up his mind this wasn’t just about breaking monopoly.
“Monopolies tend to be arrogant. We wanted to break that”, the 31-year-old South African-based entrepreneur told the Business Weekly, in a telephone interview on March 7.
“The other exchange has been hacked many times; their website is poorly developed (for example, their trading page does not auto-refresh); has a lot of bugs, security vulnerabilities, they take a long time to respond to support tickets and they delay processing Bitcoin and US dollar withdrawal requests,” Mabungu charged in a separate email.
“I believe that competition will benefit Zimbabweans since it results in lower transaction fees, better customer service, and fosters innovation.”
Golix has in the past denied being hacked.
Styx24.com went online just over a week ago, with only 18 people registered.
An initial deposit of $10 will get you trading, says Mabungu, the exchange’s chief executive, with transaction fees ranging from one and two percent on a sliding scale, almost similar to those at Golix.
About 0,2 Bitcoin or $3 200 Bitcoin’s worth traded on the Gweru-based exchange on the first day.
Like Golix, Styx24 trades Bitcoin at a premium of between 40 and 60 percent to the global price.
On Wednesday, buyers were prepared to pay $15 125 for each Bitcoin. Sellers wanted $16 550.
And now after a week of trades, volume has doubled to 0,473 Bitcoin on a 24-hour basis, with 200 people now exchanging Bitcoin, Litecoin and Dash, the only three quoted coins on Styx24, said Mabungu, a long-time Bitcoin trader and businessman, with interests in the construction industry.
The part-time computer programmer is persuaded that his trading platform is the real deal, even when the website lacks finesse and gets simple sentence construction wrong.
Withdrawals into personal bank accounts are settled within 24 to 48 hours, he says, a claim also made by Golix.
The fastest are Ecocash transfers that happen within the day, again as is claimed by Golix
“Styx24 interface is user friendly, placing a buy/sell order is at one’s finger tips,” said Mabungu, who claims to have spent a small fortune running into “millions of rand of personal funds” developing the exchange.
“The order book is visibly coupled with the trading charts and graphs and live trading views with no need to refresh pages. We will promptly fix any bug, error or glitch. Styx24 is getting an average of 9 to 15 new members daily and our daily trading volumes continue to grow.”
Styx24 was built over several months by a UK technology firm that Mabungu refused to name for security reasons.
The entrepreneur had already lost 200 000 ZAR to a bogus Indian firm that he had initially contracted to do the job.
Styx24’s board of directors is made up of only two people — Mabungu and his mother, Sheila, a professional lawyer — with staff of three, including graduates in technology and software engineering from Chinhoyi University of Technology.
Two directors is the basic minimum for an emerging enterprise, according to Zimbabwean law.
But a bigger representation of the board of directors by professionals of diverse background is often viewed as good for corporate governance, particularly in a crypto sector fraught with incidences of fraud.
Banks shut the door
Mabungu says he has been trading cryptocurrencies on localbitcoins.com, a peer-to-peer Finnish exchange connecting over 16 000 cities in 250 countries, since 2014, making millions of rand in profit along the way.
The Styx24 chief executive doesn’t hesitate to call himself “one of the largest bitcoin traders in South Africa.”
After some research, Mabungu found out that Zimbabwe was the second biggest crypto market in Africa outside South Africa, much bigger than in wealthier economies like Kenya and Tanzania. This became the primary motivation for Styx24.com.
But once he set out to develop the enterprise into something formal, Mabungu faced significant headwinds.
“It’s not been easy attracting clients to our website as well as getting qualified employees that share your vision,” he admitted.
And in a throwback to the banking challenge faced by Golix in its formative years, Styx24 has found no joy with banks either: Mabungu has struggled to open a business bank account for Styx24.
He claims that a manager with the Gweru branch of Standard Chartered Bank told him that the bank had for the past two years shut the door on new accounts, both business and personal. Other banks weren’t as welcoming either, he says.
The Business Weekly was not able to verify this claim at press time, one if it were true flies right in the face of financial inclusion as advocated by the Reserve Bank of Zimbabwe.
For this reason, all deposits and withdrawals on Mabungu’s exchange are done through his personal bank account — a not so smart thing to do for investors.
“I am a Zimbabwean. I have got bank accounts in South Africa and in Kenya. Yet, I cannot open a bank account in Zimbabwe,” Mabungu lamented.
“It is sad to note that there are 2 major banks (Barclays and Standard Chartered) that are not welcoming to new clients and find every single excuse possible to prevent young black Zimbabweans from opening business bank accounts.
“Our President (Emmerson Mnangagwa) invited Zimbabweans in the Diaspora to come back home and invest. So how does one operate when reputable banks are declining the opening of new accounts. This has been a major set-back for Styx24,” he complained.
With so many hacks and issues of stolen funds in the crypto world, retail investors are almost always in a state of perpetual fear — and exchanges all the more desperate to calm nerves.
Then there is also that issue of regulation, of which crypto doesn’t fall under any specific law in Zimbabwe, meaning trade in digital money is not regulated by financial authorities like the Reserve Bank or by capital markets regulator SecZim.
We then asked Mabungu that same old question: how safe were investors’ funds on Styx24?
“Styx24 is a registered company and we will operate within the confines of the law,” he said in reference to the legality of his entity, which in the absence of State regulation, self-regulates.
“Ninety-five percent of all the Bitcoin (on Styx24) is kept in a safe secure cold wallet at any given time to minimise losses in the event of a hack or security breach,” Mabungu said.
“We also use many separate servers to enhance security . . . and advanced encryption amongst a host of several other security measures to protect user information and hot wallets.”
Cold wallets basically keep Bitcoin or any other crypto offline, keeping them secure from hacks or theft, as it were.
The opposite is true for hot wallets.
Mabungu believes Bitcoin’s crash from $20 000 to around $6 000 in January was a “price correction”. He forecasts the price to hit $50 000 in two years on increased acceptance.
“Cryptocurrencies can help leapfrog Zimbabwe into the future by enabling many aspiring young entrepreneurs the opportunity to raise funds through Initial Coin Offerings,” he said.
What about that ridiculously funny, out-of-this world name Styx?
“In Greek mythology, Styx is a boundary — river — between the Earth and the Underworld. Styx24 is a bridge that will help young Zimbabwean entrepreneurs raise funds through ICOs,” Mabungu explained.
There is little doubt that Styx24 is a work in progress. More needs to be done to optimise the exchange for mobile gadgets, for example, improve grammar, separate business and personal accounts, among other issues.