- After the ban of using foreign currencies locally, Zimbabweans turn to bitcoin
- There has been a surge in bitcoin price against local currency
- The country has turned out to be one of the most important bitcoin markets in Africa
Bitcoin has established itself as an escape route for the common people ever since they discovered what it was and the potential it holds. The fact that all your money can be kept safe in your pockets all the time made it very popular among the disenfranchised. The number one cryptocurrency has come a long way and has lately been the best performing digital asset with huge regained market dominance. Many a time’s people seek safe haven in cryptocurrencies when their governments make conditions difficult for them. One fine example is that of Venezuela, where the government itself launched its very own cryptocurrency to fight hyperinflation. Similarly, the people of Zimbabwe have now turned to Bitcoin after their government decided to ban the use of any foreign currency, as reported by Quartz Africa.
Bitcoin to the rescue
The Cryptocurrency trading has soared new heights again after the country’s president Emmerson Mnangagwa’s government banned the use of foreign currencies for the settlement of transactions locally. The circulation of the country’s national currency, Zimbabwe Dollar, was barred back in 2009 to stabilize the nation’s economy. Since then people have moved on to various foreign currencies to transact locally. Recent changes in policies have made it difficult for the locals. People have avoided the Zimbabwean dollar after the government decided not to lift the ban. There have been reports of people trading dollars in the black market as well to shield them against the country’s increasing inflation rate, while many tech enthusiasts have turned to bitcoin.
The reserve bank of Zimbabwe had banned local banks from processing transactions involving bitcoin more than a year ago. However, many local crypto enthusiasts say that since then, the country has seen a surge in peer-to-peer bitcoin trading with various mobile platforms like EcoCash. The people have been using bitcoin for a long time to fight the liquidity gaps that have plagued the nation for more than a decade now. The trading volume and price of bitcoin in local currency has also seen new highs according to localbitcoins.com.
Many locals have also made use of blockchain technology to bypass various government restrictions. One such person is Tinashe Jani who reportedly used the blockchain to send money from Zimbabwe to South Africa, something which was very difficult after the government had banned the use of credit cards outside the country. Even though cryptocurrencies are considered illegal, the local people agree to take the risk in order to save themselves from inflation which is a far greater threat. The country has emerged to become one of the most important bitcoin markets in the southern part of the African continent.
Tawanda Kembo, CEO of the Golix crypto exchange, commented on the rise in black-market activity saying:
“What we are seeing is that there is a lot of demand for bitcoin, and there is little supply compared to demand, so all the activity in bitcoin which we are seeing is happening on dark markets instead of exchanges.”
As in Zimbabwe, so in Venezuela
The same has happened before as well. Venezuela had been struggling with hyperinflation since 2014 and its currency was almost valueless when its currency Bolivar hit 57.3 percent inflation rate. Millions of residents have fled the country as essential goods have become unaffordable. Many of the residents have turned towards bitcoin and other cryptocurrencies as their savior. Venezuelan military personnel at the border often seized the money of residents that tried to flee. Circumstances led local residents to convert all their Bolivars to Bitcoin and later convert it back to fiat via the local crypto marketplace. Storing their fiat in Cryptocurrencies was the safest method to keep their financial valuation from tumbling down since the country’s economy was failing.