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Blockchain Technology

6.1  INTRODUCTION AND BACKGROUND

Bitcoin and cryptocurrencies have over the past decade experienced a rapid rise in

value and as such, attracted investors from all sectors of society. Since its introduc­

tion slightly over a decade ago, Bitcoin has encountered a phenomenal rate of growth

in value, peaking at 1 bitcoin being the equivalent of almost 20,000 USD and in the

process inspiring thousands of other cryptocurrencies. The year 2013 experienced

the start of accelerated growth in cryptocurrencies from a modest 66 varieties to 644

in 2016, reaching 1,335 at the end of 2017, and further hitting 2,116 in January 2019

(Rochemont and Ward, 2019). A similar pattern is evident in market capitalization,

where crypto-assets have grown exponentially from around USD 10 billion at the

end of 2013 to USD 572.9 billion at the end of 2017 (Center for the Governance of

Change [CGC], 2019). This has spurred a significant proportion of the members of

the public and institutional investors to invest and trade in cryptocurrencies. The

International Data Corporation (IDC) further forecasts that by 2022, universal

expenditure on blockchain technologies will exceed $11 billion (Goepfert, 2018).

Zimbabwe, as part of the global village, has not been spared this frenzy. As with

all emerging technologies, they come with risk factors coupled with beneficial ones.

Money is a tool that has been shaped with the development of society, that is, a greater

ability to grow and adapt to the nature of the times. Not surprisingly, the money came

out of the latest technological developments and, in particular, the widespread use of

the Internet.

(European Central Bank, 2015)

Technology has thus resulted in the evolution of money, initially by the use of elec­

tronic representation of fiat money, such as credit cards and debit cards. The subject

of this study on cryptocurrencies, however, goes a step further, in that cryptocurren­

cies do not represent a paper-based currency but have value in themselves based on

trust in the blockchain ledger system. Adoption of cryptocurrencies by Zimbabweans

remains at low levels, yet there are several benefits of using cryptocurrencies that

may accrue to both the individual users and the country as a whole. Furthermore,

there are many doubts as to the legitimacy of cryptocurrencies, especially in the

African context; hence the desire through this study to explore issues of cryptocur­

rency regulation to legitimize it and improve its uptake and acceptance.

While Bitcoins and cryptocurrencies have been widely embraced by businesses,

traders and investors, among others, they have, however, been treated with much

scepticism by many governments and regulatory authorities. The hazy regulatory

6.5.1 Barriers and Risks Encountered in Trading Using

Cryptocurrencies in Zimbabwe......................................................... 105

6.5.2 To Proffer a Cryptocurrency Regulatory Framework for

Zimbabwean Markets and Users.......................................................106

6.5.3 Recommendations for Future Research.............................................106

References...............................................................................................................107