Virtual currency for Zimbabwe

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SOUTH Africa-based African Medallion Group (AMG), which has had three issues of its cryptocurrency African medallion dollar this year, said last week it now had a virtual version of the product that can be easily encashed in various jurisdictions, including Zimbabwe.

Cryptocurrencies are digital assets designed to work as a medium of exchange, and their issuance and value are secured through encryption (cryptography).

AMG issued 100 AM$5’s on May 25, 2017. By June 18, 2017, their bid price had risen by 2 000 percent to more than $100.

Subsequently, 10 one-quarter ounce medallions, which were sold out before their launch date, were released on April 2, 2017, followed by the gold-backed AM$1 that was released on June 16, 2017.

Last week, the company started issuing AM$1 virtual medallions that can be bought online and redeemed in Malawi, South Africa, Tanzania, the UK, the United States, Zambia and Zimbabwe.

“This virtual medallion is a cash on demand solution which gives you the ability to purchase desired units of virtual medallions using a debit or credit card from any country. After your purchase is complete, you will be able to immediately cash-out your virtual medallions in any currency (for example, British pound, South African rand, United States dollar, etc). This is a global solution which works in multiple locations (including UK, USA, Zambia, Malawi, Tanzania, Malawi, Zimbabwe, South Africa etc),” said AMG in a statement on its website.

The company announced a card-payment threshold of R5 000 (US$385) per transaction, with values above the limit being processed in batches thereafter.

“AMG will then payout relevant funds to either the AMG Visa card or any bank account of the customer’s choice around the world,” it added.

In essence, cash-out transactions can be made through the AMG Visa card, which can facilitate instantaneous withdrawals from any automated teller machine in South Africa, or fund transfers to any bank account around the world. Fading faith in fiat (paper) money has led to people increasingly turning to cryptocurrencies.

Fiat is Latin for “it shall be” — an indication that paper money is often based on “faith” and has no specific underlying commodity underpinning its value.

This has seen a shift back to wealth-backed currencies as it was in the days of the gold standard, with digital currencies like Bitcoin, Ethereum and medallions becoming viable investment and trading options. At the recent St Petersburg World Economic Forum in Russia, host President Vladimir Putin — who met Ethereum founder Vitalik Buterin at the event — said the digital economy “isn’t separate” as it was “essentially the foundation for creating new business models”.

But limited Internet penetration and financial illiteracy are hampering the growth of cryptocurrencies in Africa.

For instance, the Postal and Telecommunications Regulatory Authority of Zimbabwe says the country’s Internet penetration rate at December 31, 2016 stood at 50,1 percent.

AMG recently told The Sunday Mail Business that cryptocurrencies were a reliable store of value.

“It is unfortunate that the nature of this emerging market of cryptocommodities is somewhat esoteric; however, it is our mandate to bring this knowledge to the African people. Gold medallions are a new form of cryptocurrency; we would like to call it crypto commodity, an Afro crypto commodity aimed at the man in the African street, to bring hope, afford the African child an investment opportunity and enhance a wider spectrum, investment, trade and enlightenment. Put simply, medallions are coins that are backed by an underlying commodity, which is gold.”

According to global firm Autonomous Research, companies have raised more than US$1,3 billion this year in digital coin sales.