During this ongoing event, the price of bitcoin in Zimbabwe has surged to almost double the global average. Zimbabwe has not made use of their federal dollar since 2009 due to hyperinflation reducing the once-powerful currency to a near zero value. In 2015, one hundred trillion Zimbabwe dollars was worth $40.
Zimbabwe has been in an active coup since November 14, with president Robert Mugabe almost certain to step down or be removed from power. The 93-year-old President and First Lady were placed under house arrest by the Zimbabwe Defense Forces. Although they were confirmed to be safe and unharmed, this has caused political turmoil in the country.
With their currency entirely devalued, Zimbabwe nationals validated the acceptance of various other currencies in their country. The most common of these remain the United States Dollar and the South African Rand, with bitcoin now climbing the ranks to join them. Zimbabwe merchants also accept other currencies such as the Euro, the Indian Rupee, the Pound Sterling and the Botswana Pula.
Besides its use for investment purposes, the circulation of bitcoin is increasing throughout the world by people and nations who lack faith in their government or local currency. Furthermore that, it is widely embraced as an effective method for sending money internationally with minimal fees. As there is a higher average of mobile phones per person than bank accounts per person in Zimbabwe, bitcoin has quickly become a viable alternative to traditional cash payments, making it significantly easier to operate.
Political Power of Cryptocurrencies
After the military takeover earlier this week, the price of bitcoin in Zimbabwe jumped to almost $13,000. The price spike illustrates a real-world example of the cryptocurrency’s usage and potential for the future. As it is not linked to bank accounts, political turmoil nor inflation-related currency value decline, it is fast becoming the preferred method for residents of failing economies to transfer money.
It is difficult to establish statistics or trends when it comes to the number of virtual cash moves from industrialized nations to the developing world, as bitcoin allows anonymous cash transfers. However, it has been established that bitcoin is the most attractive form of cryptocurrency used in Zimbabwe.
According to Andrew Milne, from Altana Digital Currency Fund, there is a substantial demand in many countries for an asset that is not vulnerable to the same risks as traditional currency.
Golix is the single cryptocurrency exchange in Zimbabwe. The company stated that over $1 million worth of transactions were processed during the last month. This figure is ten times the amount reported on the whole of 2016. As the platform is unregulated, the prices of cryptocurrency available through the platform are entirely set by supply and demand. The lack of regulation has allowed the price of bitcoin in Zimbabwe to surpass the global average.
According to Golix’s website, the money in a Zimbabwean bank account has limited buying power. The company encourages members of the public to invest in bitcoin, expressing that it is better than the present traditional currency available in the country.
As the coup continues, the future of Zimbabwe’s leadership is still to be seen. However, there is no doubt that this event marks the end of President Mugabe’s reign. Bitcoin continues to increase in value around the globe, having broken a record of $8,000 per bitcoin this week.