Nov 20, 2017
- On Nov 04, 2017 16:35  By  rolando
As the country’s economy grows more unstable, Bitcoin is emerging as the solution to its problems.
Bitcoin has experienced immense growth in the last week alone. This last Tuesday morning, the international average price peaked at $6634, only to be surpassed when prices reached up to $7500 today.
However, in a dilapidated economy such as Zimbabwe, the Bitcoin exchange rate far exceeds the international average trading price. As the Bitcoin price reaches ever higher, many prospective investors become wary of the higher price, making it more difficult for entry-level investors to join the market. Despite these difficulties, Bitcoin is growing in demand in Zimbabwe.
It is not unusual for Bitcoin to trade at prices higher than the international average, especially in countries where the local economy is unstable. This has proved to be the case in Zimbabwe, which has soon become the home for the world’s priciest Bitcoins. On the local exchange platform, Golix, Bitcoin prices reached up to $12,400 this past week. The latest prices are 87% higher than the world average and are also indicative of an increase of $2400 since 20 October. However, in the same time, the world average price of Bitcoin has grown with only $1000.
Zimbabwe’s economic difficulties have been well-documented and a long time coming. The government decided as early as 2009 to replace their fiat currency, the Zimbabwean Dollar, with the US Dollar. This decision was prompted by the fact that the Zimbabwean Dollar was subject to increasingly exorbitant inflation rates. The country’s central bank even had to start issuing notes as high as 100 trillion dollars.
However, the switch did not solve their problems, instead, it introduced new ones. Zimbabwe experienced a lack of US Dollars circulating through the country. As the country could not provide enough US Dollars to meet the demand, the government started to issue government bond notes. However, these proved ineffective, as they were not readily accepted by foreign entities. Since their issuing, government bond notes are mostly traded on black markets.
CNN has previously reported on the dire situation, noting in particular that Zimbabweans frequently wait in tremendously long ATM lines just to withdraw a few dollars from their accounts.
Bitcoin might prove to be the country’s long-awaited solution, as it can be bought electronically and can be spent in foreign countries.
Golix coordinator, Yeukai Kusangaya confirmed that most users purchase Bitcoin electronically. Seeing as Bitcoin does not rely on cash, users can trade amongst one another using peer-to-peer trading transactions.
However many have pondered over the government’s stance on Bitcoin. While some experts hold that the government will inevitably ban Bitcoin, or at the very least implement severe restrictive policies, others claim that the government is unlikely to take action due to a lack of resources and fear of failure.
In an interview with CNN, the Zimbabwe-based tech analyst, Nigel Gambanga, stated that, considering the dire circumstances, the government is likely to embrace the possibilities of Bitcoin by implementing a formal regulation process, or by proclaiming it as legal tender.
Gambanga stated that considering the country’s economic crisis, the government could choose to actively implement Bitcoin into its economic landscape. However, Gambanga also issued a warning over the fickle nature of the Zimbabwean government. Since the Zimbabwean government is known for it’s strict, and often bizarre policies, Gambanga noted that the government banning Bitcoin altogether will be unsurprising.