The bitcoin price in Zimbabwe is shooting up, just as the country’s economy is collapsing (again). The price of a single bitcoin touched $10,000 USD on the Golix.io exchange this week — while globally it is priced around $6,000.
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Bitcoin Price Hits $10,000 in Zimbabwe Due to Cash Shortage
The price of bitcoin is almost double the global average, and is reportedly used both by businesses and individuals. In 2009, the country adopted the U.S. dollar as the Zimbabwean dollar had no remaining value. Since then the U.S. dollar is its fiat currency.
As the country is far to untangle itself from the years-long crisis, Bitcoin is aiding the people to withstand economic failure. The non-fiat digital currency now sells for $10,000 or over in Harare, country’s capital. Meanwhile LocalBitcoins Zimbabwe is selling it on the global average price.
Why Is Bitcoin So Costly in Some Places?
In the 2000s, Zimbabwean president Robert Mugabe prompted citizens to take over foreigner-owned (mainly UK descendants’) commercial farms. This questionable action by the president collapsed economic growth via agriculture. The closure of foreign-owned farms and businesses left the Reserve Bank of Zimbabwe with no money.
His solution? print more. The result was notes with trillion-dollar denominations that now sell as collectors’ items on eBay.
The economic condition got so bad that people carried piles of cash to buy daily supplies as inflation tripled. Many adopted the barter system for a while to overcome the valueless currency. Mugabe finally replaced the Zimbabwean dollar with U.S. dollar to overcome the hyperinflation.
The country now uses U.S. dollar and has stabilized its inflation rate. In an interview with a local publication John Mangudya, Zimbabwe Reserve Bank Governor said “Yes, we import cash almost every week and we are now importing $10 million on a weekly basis. When we say we import cash, we say we import dollars because we said we want to continue using the dollar in this economy.”
According to Bloomberg the government rations just $20 per person, regardless of how much the individual has in their account. The Zimbabwean central bank has now begun issuing “bond notes” that are pegged directly to the U.S. dollar. However, the majority of them do not use it as foreign suppliers do not recognize it and it hampers what trade remains.
Bitcoin – A More Trusted Currency
This is where bitcoin has gained the trust of the people over fiat currencies in some places. The trust has made local businesses work on ways to accept payments via bitcoin. Many people can now pay their bills using the cryptocurrency.
While many people in developed countries think of bitcoin as a risky investment, it is considered a safe form of investment in Zimbabwe. Zimbabweans believe bitcoin is the currency that won’t fail them — like the properly governed currencies did.
The current economic condition of the country is different to when the crisis first began. Economist Vince Musewe stated “Then, there was plenty of cash money, but no goods in the shops. Now, there are goods on the shelves but no money to buy them with.”
Therefore, Zimbabweans are looking for a currency that will transform their lives. In recent times this has been digital currency –bitcoin has globally been a spur. With the global acceptance of bitcoin, trade is easier especially for Zimbabweans. It offers a new mode of payment that is widely accepted.
Can bitcoin help economic growth in countries like Zimbabwe? Please share your thoughts in the comments.
Images via Pixabay, eBay