Governments in Africa simply cannot stop an idea whose time has come. In Zimbabwe, financial regulators banned cryptocurrency trading, and shut down two exchanges, thinking to have killed the ecosystem, only for Bitcoin to find a new life on Whatsapp. Kenyan authorities have sounded tough on virtual currency, warning banks and individuals against trading such, but the local cryptosphere continues to flourish, both on social media and on centralized exchanges.
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P2P Whatsapp Market Defies Regulatory Bans and Shutdowns in Africa
Jack (not his real name) quit his job at a digital currency exchange in Harare after Zimbabwean financial regulators effectively banned cryptocurrencies in May. Today, he still helps make things happen – just not on the exchange, but on Whatsapp.
“I don’t buy (cryptocurrency). I have buyers who buy,” Jack told news.Bitcoin.com. He connects buyers and sellers of bitcoin by placing bids and sell orders on various Whatsapp groups, before inviting interested parties to a private chat to close the deal.
Jack, who charges a 5% commission for his services – slightly above the average levied by exchanges while they still functioned – represents the new face of cryptocurrency trading (bitcoin largely) in Zimbabwe.
Bitcoin trades have gone underground or shifted to social media since the Reserve Bank of Zimbabwe (RBZ) shutdown the country’s only two digital currency trading platforms, Golix and Styx24, in May on allegations of violating Exchange Control regulations and of offering unlicensed banking services.
But cryptocurrency trading did not die with the ban. Instead, it reinvented itself on Whatsapp, through peer-to-peer trades. Over time, crypto enthusiasts have built strong Whatsapp groups where they share information and news on developments taking place in the sector. Now, they are using similar groups to buy and sell cryptocurrency, utilizing connections they already know or new ones. A certain amount of trust has since been established within the community, which is key to building confidence and preventing theft.
On Whatsapp, the Zimbabwe Premium Remains
In Zimbabwe, the network is thriving, even though the price of each BTC, at $13,721 at the time of going to press, sits at a premium of about 110% to the global average price.
“0.033 BTC available,” reads the Whatsapp chat I send to Jack. “Have you resolved to use preev.com rates?” he replies, in reference to an initial disagreement over the average BTC price to be used for the transaction. “My buyers and I use that rate, so can only look for a buyer once we agree that preev.com is where the rate will be based on.”
The deal goes through. I send the BTC to a given address first and share the transaction ID with Jack, before he in turn promptly makes a payment to my cellphone. It helps that I have met Jack in the past, for given the issues of fraud and stolen coins that occasionally surface, sending bitcoin to someone unknown simply on the basis of Whatsapp recommendations can be a nerve-wracking experience. Others opt for a physical meeting once they agree on