Cryptogem Global challenges the Central Bank of Zimbabwe with the new Bitcoin P2P exchange

November 9, 2018 Bitcoin

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Cryptogem Global, a new peer-to-peer bitcoin exchange (BTC), was opened in Harare in disregard of the ban of the Central Bank of Zimbabwe by cryptocurrencies. The decentralized platform allows Zimbabweans to buy and sell BTCs without the need for intermediaries such as legacy financial institutions.

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A globalized cryptocurrency exchange

"Cryptogem Global is a … bitcoin trading platform where people around the world can exchange their local currencies and electronic money with bitcoins," said Bitcoin.com news Melissa Mwale, co-founder and chief executive Cryptogem Global officer.

Mwale said the idea is to create a borderless platform that will not limit operations to a particular country. Offering an example, he explained that the company aims to provide a service that will allow "someone in Zimbabwe to buy from someone in the UK using Paypal, Skrill or Western Union".

For some time, virtual currencies have operated under a cloud of uncertainty in Zimbabwe. But the ban on cryptocurrencies – announced by the Reserve Bank of Zimbabwe in May – has indicated the beginning of an unpredictable and dark phase, as it has paralyzed the operations of the country's only two digital currency exchange platforms, Golix and Styx24. Since then, commercial bitcoins in southern Africa have gone underground or moved to social media platforms such as Whatsapp, where the risk of theft or fraud is significantly higher.

The Reserve Bank of Zimbabwe, the central bank of the country, essentially has no power to close the cryptocurrency trade, which has been accused of providing unlicensed banking services, in violation of the Exchange Control Act. But the law does not allow it to ban also the cryptocurrencies. A previous attempt by the Reserve Bank of Zimbabwe to shut down Golix was canceled by the High Court, which established that John Mangudya, the governor of the central bank, had no jurisdiction over the country's crypto-landscape.

Instead, the central bank has closed the stock exchanges by proxy, through commercial banks, on which it offers full control. He ordered the banks to close the accounts belonging to Golix and Styx24, effectively cutting off their air supply. And with that, all centralized digital money activities have ceased effectively in the country.

Challenge the ban

Melissa Mwale

But Cryptogem is challenging this backdoor ban in a particularly clever way. Bitcoin P2P exchange does not have bank accounts, so the central bank can not close them.

"Cryptogem has no bank account in Zimbabwe," said Mwale, who saw 300 new registrations on the platform within the first week, with total trade reaching around $ 2000. Transaction fees are on average 0.9% for bids and 0.00005 BTC for deposits and withdrawals. She added:

At the moment there is no need for a bank account, even if we are registered as a limited liability company in Zimbabwe. We do not work directly with the banks because we do not manage any fiat currency. And if you have noticed, the prohibition (central bank) was mainly directed to the use of the banking system
services for exchanges.

However, the new exchange will be encouraged by Mthuli Ncube, Zimbabwe's new finance minister. He spoke positively about cryptocurrency and blockchain technology.

"I think the attitude for Zimbabwe should be to invest in the understanding (digital resources) of innovations," said Ncube, a professor of economics, in an article published in September. "Central banks are often too slow to invest in these technologies".

To trade on Cryptogem, it is generally necessary to make a BTC deposit, offer and wait for offers that match the price requested or that is favorable to them. Once a buyer shows interest, both the buyer and the seller are redirected to a private live chat in the exchange where the details of the transaction, including payments, are finalized. The exchange then releases the BTC to the buyer, after having kept it in storage, once the seller confirms the payment. News.Bitcoin.com tested the Crypotogem bitcoin interface in a $ 5 deal, which ended smoothly within minutes.

The price of the bitcoin on the exchange is significantly inflated, between $ 20,000 and $ 24,000, which reflects the volatility of the exchange rate. Current core bitcoin prices in Zimbabwe seem to track the black market rate of the US dollar, which is assessed at three different levels depending on how the payment is made: by bank or mobile, paper notes and / or coins. Each dollar costs about three times more for the cash transfer from the bank or mobile phone of the Zimbabwe substitute currency, known as "bonds", which the authorities declare to be 1: 1 with the US dollar.

In a market that is sometimes plagued by fraud and the theft of investor funds, security is paramount. Mwale has stated that all accounts are protected with two-factor authentication.

"Only a minimal amount of funds is kept online (hot wallet) just to facilitate quick withdrawals," he added. "On application security, we have third-party security auditors who enter and control security in our main application." Our server information is hidden from the public, behind a firewall provided by one of the industry leaders in this regard. "

What do you think of the new P2P exchange in Zimbabwe? Let us know in the comments section below.

Images courtesy of Shutterstock.

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Cryptogem Global challenges the Central Bank of Zimbabwe with the new Bitcoin P2P exchange

A globalized cryptocurrency exchange

Challenge the ban

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