Exchanges have been a mixed bag for Bitcoin: On the one hand, they are absolutely necessary to provide liquidity to Bitcoin, but on the other they become centralized points of failure subject to hacks, thefts, and governmental action. The monumental failure of Mt. Gox taught us as a community a few of things: never trust any third party with the keys to more bitcoins than you can afford to lose, do your due-diligence on any company you choose to keep your bitcoins with, and when the red flags start to go up, it’s better to get your money out earlier than later.
In truth, though things are getting better, the exchanges operating now all seem to leave a little to be desired. Some are run by groups that won’t identify themselves, something I stopped trusting after being scammed out of a few Bitcoin by a guy going by the name TradeFortress last year; some good platforms, but have poor banking relationships that make getting fiat on or off them a chore; and some have onerous know-your-customer practices which might make the exchanges less vulnerable to regulatory attack, but might also might make the customer wonder what the advantage of Bitcoin is anyway.
The exchange Ice3X (pronounced ice cubed) being run in South Africa caught my attention while I was researching an interview I recently conducted with Alakanani Itireleng in Botswana. The exchange has been blogging in support ofAlakanani’s and SOS Villages’s efforts to help orphaned children which suggests that Ice3X is an exchange with a heart.
Though quite new on the field, having only been founded in November of last year, they seem to have made great strides in answering some of the concerns that many have about using Bitcoin in terms of security and usability. Further, Unlike the US and some other countries there is no hesitancy of banks to keep accounts with Bitcoin businesses in South Africa. As one of the powerful BRICS countries, this one thing gives Ice3X as strong advantage to help move South Africa into digital acceptance.
I decided to get in touch with them to try to get a better picture of what is happening with Bitcoin in Africa and also learn more about this relatively new exchange. Ice3X‘s Tristan Winters was kind enough to talk with me:
There has been a lot of press recently about the prospects of Bitcoin and Africa. What do you think underlies this new interest?
This interest stems from a belief amongst many in the Bitcoin space that the technology’s greatest potential lies with the world’s poor and ‘unbanked’.
The people who believe this typically have the loudest voices in this space. They champion this position. It is then continuously repeated by individuals and press until it becomes accepted as a truth.
How do you think Bitcoin can help Africa and what do you see as the most likely way its development is going to play out?
Right now the immediate potential we see is with charitable giving. That is why iceCUBED has launched its ’Resources’ program. African community organisations, doing good work but struggling to survive, come to us. They are vaguely familiar with Bitcoin. They are then introduced to the potential of the technology for their operations. They become intimate with Bitcoin and its promise. We are an exchange. Here we act simply as a facilitator and educator: a platform. It is the right approach Corporate Philanthropy.
Organisations are given a wallet, zero fee account and a blogging voice to inform the world of their activities, collecting donations directly. They have complete control of their accounts and direct access to global funding, at no cost: a world of possibility presents itself. It is magic.
Anything else is either ‘hot-air’ or so far down the track that it is not in our current plans. Just to get Bitcoin to work requires a lot of core infrastructure that is still nascent or doesn’t exist. This is both on the technology and finance sides. Once that exists there is a better chance it can be rolled out successfully to continents like Africa. We’ll be right there through that process.
Across the African continent, the speculation is that because of theprevalence of cellphones and services like M-Pesa that Bitcoin has a real possibility easy adoption since people are already primed to use money digitally. On the other hand, there are issues with learning about Bitcoin and then there are fees for buying and selling Bitcoin that might wipe out the ‘low-fee’ advantage. Do you think these might wipe out the relative advantage Bitcoin might have for the regular person or do you see a way around these challenges?
We ultimately see these challenges as real and routinely glossed over. This stops any productive discussion as to how to resolve them.
Nevertheless, all challenges are opportunities. We have faith in the market process, entrepreneurs and companies to solve such issues. If it is Bitcoin or some other blockchain based technology that ultimately provides so much utility that is used, well, that remains to be seen. We are blockchain agnostic in that regard. We are here to provide utility and solve problems for customers.
I see from you site that people can send funds to you from any bank in South Africa. Since moving value back and forth between BTC and fiat is one of the chief problems we face with broad adoption, this really caught my eye. How easy and cheaply can people buy BTC, and more importantly, get BTC back in their hand as fiat?
They can do this very cheaply. We bring a full service exchange service to those wishing to trade between Rand, Bitcoin and Litecoin. The fees are amongst the lowest in the world.
What’s the banking and regulatory environment like for you folks? Have you had any trouble?
We have no trouble at all. Our banking partners have been wonderful and supportive partners. They are aware of our work in the Bitcoin space. South African banks are forward looking. Some, like Standard Bank, have even trialed their own Bitcoin systems for their clients, internally. The news was well publicised earlier this year.
I also see that you folks have been engaging in some charity work. What have you been doing and do you have any further charitable activities planned?
Our ’Resources’ program is going very well. We have been educating many charities as to the benefits of Bitcoin, Litecoin, etc. for their activities. We have had a lot of charities approach us, very interested in joining the program. We have to vet every charity, to make sure they are legitimate. It is a slow but necessary process. So the interest has been somewhat overwhelming.
Currently we support three local, Africa based charities through the program. We have raised significant amounts of money, through Bitcoin and Litecoin, for these charities. Anyone interested in reading more and donating can do so here: https://ice3x.co.za/charity/
As opposed to a lot of similar charity initiatives our team is full of Africans, familiar with the intricacies of operating locally. This helps us in such initiatives.
Do you think that NYDFS BitLicense would affect your business? What are your plans to deal with that eventuality?
We plan on adding other currency pairs for trading. This includes the US Dollar. Then it may affect us, as we expand our exchange operations. We’re adopting a wait and see approach at the moment. The BitLicenses are clearly a work in progress that could ultimately take any form, if and when they are made final.
Of course, the Bitcoin space is full of tales of hacks, scams and swindles. How do you ensure your customers that their cryptocurrency and fiat investments are safe?
We are fully transparent with our security procedures and I urge anyone interested to read all details here:- https://ice3x.co.za/icecubed-super-security-procedures/
You folks trade Litecoin in addition to Bitcoin. There are a lot of altcoins out there. Any plans to accept any others?
Depends on if any of them achieve the required market size, trading depth and network security to satisfy us as to their integrity and longevity. Litecoin is fairly routine across exchanges in markets globally. We were adding it even before all the China exchanges.
There is a lot of debate about whether altcoins serve any real purpose (other than pump-and-dump), what purpose do you think altcoins serve and which ones are you watching the most?
Bitcoin is open source. That is the only way it could ever work. So, being completely pragmatic, I am not sure how you could stop the creation of so-called ’alt-coins’. Bitcoin is going through a market process. So called ‘Alt-coins’ are a part of that. As usual, caveat emptor.
What’s your elevator pitch for Bitcoin to someone who doesn’t know much about it?
Good question. It really depends on the audience. I have found people respond well to the idea of informational scarcity, if explained well. That is what Bitcoin fundamentally represents; the first time we have achieved scarcity in the realm of information.