Just when people around the world are celebrating the price of Bitcoin making a new all time high at $6600 , a certain country in South Africa does not mind shelling out $10,000 USD for availing the same. Yeukai Kusangaya, a trade coordinator of Zimbabwe-based bitcoin exchange Golix recently stated that, “The price has been high for some time and it keeps going up.” This Harare-based trading platform reported digital currency trading at price levels which crossed $10,000 USD last week which comes almost as a double of international exchanges plying the crypto field worldwide. The growing popularity of Bitcoin received a positive impetus in the form of significant liquidity crisis in Zimbabwe which have handicapped the African nation by ushering in deep rooted inflationary trends.
Read: The Price Of One Bitcoin Costing around $10,000 In Zimbabwe
The administration led by President Robert Mugabe tried to bottle up the hyperinflation plaguing Zimbabwe back in 2008 by replacing their indigenous currency with US dollar. However the South African nation had been facing widespread shortage of dollar bills lately causing banks to ration withdrawals. Government did try to make up for the fiasco by issuing “bond notes” whose value seems to be at par with US dollars. However black market exchanges have registered substantial drop in the value of these bond notes causing price inflation. Strict capital controls have also complicated international trade leaving importers in the search for more creative solutions which include the likes of digital currencies. Nigel Gambanga, a Zimbabwean technology analyst recently stated that, “bitcoin isn’t subject to the central bank measures so it has become an alternative that importers are willing to pay a premium for.”
Bitcoin also comes in as a safe haven for investors seeking out refuge from the crippling economy.
Zimbabwe has secured the third rank in Bitcoin Market Potential Index, which was created by Dr. Garrick Hileman, an economic historian. The Index reveals that financial crisis and informal economy of Zimbabwe could be fuelling up its bitcoin adoption. Digital currency experts hold the view that Zimbabwe’s unique conditions offer an ideal test case for examining the viability of this cryptocurrency on a national scale.
“The underlying takeaway is that cryptocurrencies are here to stay and have a place in the world where monetary policy and fiat currencies cannot be trusted. It’s only a matter of time before an emerging or frontier market government decides to adopt a cryptocurrency as a foundation for credibility, transparency, accountability, and attraction of foreign capital.” says Kay Van-Petersen, a Saxo Bank analyst.
“I wouldn’t expect any tolerance from a country with a fragile financial system trying to maintain capital controls,” says Hileman, further suggesting the government might even walk in Chinese footsteps of banning Bitcoin exchanges. However he is doubtful whether the country has sufficient resources to bring upon the ban.
“If trade in bitcoin intensifies with no resolution to the country’s currency woes, we could witness the central bank and government revise its position by taking on a more active role in cryptocurrency trading,” says Gambanga.
“At the very least, (by) recognizing cryptocurrencies through some form of regulation. The state has already taken extreme measures like banning the importation of fruits. So adding bitcoin to the country’s multi-currency basket might not be so absurd,” proposes the analysts hinting at Bitcoin becoming the official Zimbabwean currency in days to come.
According to, Tawanda Kembo, the CEO of Golix, “Bitcoin will not be the only digital currency that succeeds.” This prompted the company to get itself rebranded on 1st October of this year from BitFinance. Golix representative Kasangaya, discussed the issue of Bitcoin adoption following Zimbabwe’s dysfunctional economy. Mrs. Kasangaya recently addressed the local media by saying that, “The general trend shows an increase in interest in the Bitcoin,” causing “normal upward-growth trajectory of most innovations.”
Hyperinflation and acute cash shortages caused major financial crisis crippling Zimbabwe’s economy. Mrs. Kasangaya also added that most of the Golix transactions take the electronic route. She was quoted as saying:
“It is not necessary to have cash to buy bitcoin. Most people just use the generally available electronic means. As such, the buying of bitcoin is not affected by the prevailing cash shortages… in the event that a seller wants cash for bitcoin, they will have to identify such a buyer with cash on their own and do a peer to peer trade.”
“Some use it to pay for services provided outside the country, such as software. For example, a local software engineer developing an app can use bitcoin to pay for necessary software tools. Others use bitcoin to, say, import a car they can use to run a small business …. The good news with using bitcoin for such purposes is that no foreign currency leaves the country, unlike a situation where the same person was to ask their bank to do a telegraphic transfer… [which] reduces the country’s pressure on nostro balances,” adds Mrs. Kasangaya while briefing on the fact that Zimbabwean citizens are rapidly adopting bitcoin for gaining access to a variety of international markets.
“There is currently more demand than supply of bitcoins… Interest in bitcoin has peaked as people cannot send money outside or pay for international transactions using formal banks. People have had to look for alternatives and bitcoin has been a useful solution which can be used to purchase goods on Amazon or to pay for vehicles from international suppliers and traders,” said Mrs. Kasangaya while speaking to Quartz last week.
Also Read: The Government Of Iran Getting Ready For Bitcoin Usage In The Country
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