Ever since its launch, Bitcoin had been subject of much controversies with a certain sect comparing it to the yellow metal whereas others termed it as fraud. Whatever be the case, with its rapidly rising price scale, we surely do feel that it would have been a great option if we had jumped into the Bitcoin bandwagon some years back when its price was still affordable. But with its price crossing $6900 recently, the common feeling most of us are experiencing is that “It’s too expensive now.” But in case $6900 feels over the top for you, welcome to a certain South African nation where people don’t mind paying $12,000 plus for laying their hands on a single Bitcoin token. Acute liquidity crunch in Zimbabwe has accentuated its appetite for cryptocurrencies causing Bitcoin to being traded at record high figures.
Golix.io a cryptocurrency exchange of the South African nation recently made the announcement that it had handled transactions worth $1 million alone in the month of October 2017. Operating with an employee base of 5 full timers, Golix.io which recently changed its name from BitcoinFundi, made the announcement of scoring profit figures.
Background Story of Bitcoin in Zimbabwe
The $12400 price registered by Golix exchange on thisTuesday signifies a 87% premium mark-up over and above the global Bitcoin price average. Starting October 20th, the price of Bitcoin has risen by $2400 in Zimbabwe compared to the global price rise of $1000 during the same time frame. Liquidity crisis had been plaguing Zimbabweans for quite a long time now. The country welcomed US dollar as its legal tender in 2009 following rampant hyperinflation. This caused the country’s central bank to introduce 100 trillion dollar notes to handle the crisis.
However US dollars could not fill in the gap which was caused by massive demand in the currency hungry country. Government bond notes having equal value as that of US dollars were not accepted readily by foreign entities and thus plunged into black market exchanges. This forced banks to impose a strict rationing on the withdrawal of US currency with Zimbabweans having to stand in long queues for withdrawing just $50 from their respective accounts. This has created a widespread demand for Bitcoins in Zimbabwe as the same can be obtained without hard cash as it readily accepted by foreign nationals.
- It has been a tough call to get money out of Zimbabwe during the past six months. With certain banks restricting or closing avenues and others asking customers to pre-fund their accounts with equivalent US dollars the countries import sector got a heavy blow.
- Since Zimbabwe relies thoroughly on imports, business houses are always in dire need of hard cash for fostering their trade. This propelled them to turn towards black markets for competing their transactions. The countries banks were also not of much help since they did not issue foreign exchange to exporters in spite of Reserve Bank of Zimbabwe having a priority list in place which determines the order of issuing forex given limited resources.
- Individuals with big capital requirements such as those trying to avail a loan for buying a house or car also got bottlenecked. Student loans were also kept on hold.
Although cryptocurrency is not acceptable by every single supplier, it still serves as a safe haven for financial holdings. However those buying Bitcoins now will definitely find it easy to preserve its value as Zimbabwe slowly heads towards a full economical facelift following its 2018 election.
“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 shortage… 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,” revealed Yeukai Kusangaya, a trade coordinator at the Golix bitcoin exchange, to the local news outlet The Standard.
Bitcoin As A Legal Tender
Certain experts hold the view that government shall soon interfere to bring down Bitcoin usage under its capital control operations. However others hold the view that the governments resources are not capable enough for imposing such a restriction. Nigel Gambanga, a Zimbabwean technology analyst recently told CNN that given the bubbling crisis, he would not be surprised if the government brings upon formal legislation or accepts Bitcoin as a legal tender.
“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. 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,” says Gambanga.
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