Zimbabwe is in crisis. Rampant inflation makes it almost impossible for money to have real value. The government also doesn’t help. So, people turn to Bitcoin to secure their funds.
We’ve covered Venezuela’s troubles many times. In South America, the government has been trying to deal with inflation with the help of cryptocurrencies. Nicolas Maduro, the president of Venezuela, even created a stablecoin, which was supposed to help the economy. However, things are different in Zimbabwe.
History of repression
The story of Zimbabwe is very similar to many other former colonies in Africa. First, there was the oppressor (in this case, the United Kingdom). Only white people had any laws and privileges.
At the beginning of 60s, Joshua Nkomo created the Zimbabwe African People’s Union (ZAPU), a socialist political party. A few years later, the radical branch of ZAPU called ZANU liberated the country and declared independence as Rhodesia. A similar story for many others in Africa.
In 1980, Robert Mugabe became Prime Minister and took power. He changed the name of the country. From then on, Rhodesia ceased to exist, and Zimbabwe replaced the old name.
Mugabe ruled the country for decades. In the 90s, the crisis in Zimbabwe began. This was due to Mugabe’s huge economic errors and the catastrophic drought, which destroyed more than 70% of all crop yields. Mugabe’s regime was at least controversial. He didn’t organize national voting and was regarded by many people as a tyrant. As the hyperinflation spread like a plague, it became clear that the change of power is coming.
The change in power
In 2017, there was a coup in Zimbabwe. Mugabe was deprived of power, and his duties were taken by the then vice-president and today’s president Emmerson Mnangagwa. It seemed like for the first time, Zimbabwe could be heading into some normality. There were supposed to be normal elections, Mnangagwa promised to give recompensation to white farmers for the nationalization of the economy, and promised to attract foreign investors.
As it turned out, it didn’t happen. While some resolutions came into force, others didn’t. Zimbabwe is in an even bigger crisis than it was two years ago.
Africa’s tough love with money
Now, let’s talk about money. In 2009, Zimbabwe abandoned its own currency – Zimbabwe dollar. It was due to the astronomical hyperinflation of the national currency. After that, the authorities switched to an international currency basket (including the Chinese yuan and the American dollar). Then, there was the Real Time Gross Settlement (RTGS) dollar. Then the RTGS dollar was replaced by the revamped version of Zimbabwe dollar.
If you have so many changes in your country in less than ten years, you know that something shady is going on. Any turn didn’t resolve anything, but created even more problems and sped up the inflation. Things got so bad that this is the reality today:
In Bitcoin we trust
Right now, foreign currencies are banned in Zimbabwe. By law, you can’t have or operate with USD, CNY, EUR, or any other. You have to use Zimbabwe dollar. There are at least two problems with that. Firstly, hyperinflation causes the creation of the above images. Secondly, people don’t trust the government. Citizens have their savings in American dollars. For fear of confiscation or imprisoning, people decided to go into Bitcoin.
Recent dollar ban ignited Bitcoin fever in the African country. Citizens decided to take action against the government and tried to buy bitcoins. A very similar case to Venezuela.
Bitcoin is also banned in Zimbabwe. However, that doesn’t stop people from buying BTC. LocalBitcoins, the only larger cryptocurrency exchange operating in Zimbabwe, has noticed massive trading volume in the recent weeks.
Bitcoin? Only for premium clients
There were many voices that Bitcoin will shortly reach once again $20,000 milestone. Nevertheless, Bitcoin is still below $10,000 in time of writing. But that is the price for the rest of the world.
What about Zimbabwe? According to several reports, the price for 1 BTC there reached much higher. According to LocalBitcoins, some Bitcoin owners asked for over $100,000 for 1 BTC! There was even one owner who wanted more than $300,000!!! Still, we don’t have any confirmation if this is true or not, but it seems like Bitcoin became a very desired product in the African country.
As in many countries in crisis, there are two economies in Zimbabwe: the official one, and the black market. Since Bitcoin is banned, people can trade it only on the black market. Citizens choose Bitcoin over the national currency. What does it mean for the most popular cryptocurrency? Perhaps nothing, or maybe it is another proof that Bitcoin can become the world’s currency.
The crisis is progressing in the African country. The authorities don’t seem to have any solution. We’ve tried to reach several economic journalists from Zimbabwe, but none of them wanted to say anything against the government.
Zimbabwe is another case of choosing trustless Bitcoin over the authorities. We shall see what will happen next. Is there any mass adoption of Bitcoin possible? It seems unlikely to happen, but who knows? Maybe the Zimbabwean government will listen to the people and resolve its crisis with the help of the cryptocurrency? We will be updating that story if anything new comes out.
Image by CECIL BO DZWOWA / shutterstock.com
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