Bitcoin: Zimbabwe’s Only Hope?

Zimbabwe

On the local Zimbabwe exchange of Golix, Bitcoin is currently trading large at the equivalent of $12,000 USD, per coin.

This may seem absurd for most of us living elsewhere to spend so much on one Bitcoin but Zimbabweans, however, the cryptocurrency offers a rare “safe haven” from its country’s inevitable financial implosion due to hyperinflation.

There have been reports that over the years, the inflation had driven its residents to carry entire backpacks in cash in order to pay for weekly groceries.

Cash is now running short in banks as inflation rises and banks are now putting caps as to how much can be spent outside of the country.

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As residents are losing value to their bank deposits by the day, they’ve turned to Bitcoin out of complete desperation.

Zimbabwe’s president, Robert Mugabe, is urging its residents to take risks on the cryptocurrency, as its country is in a complete desperate state.

Arnold Manhizwa, a 34-year-old father of two that works for an IT and Telecoms Company, told Reuters, “I have now changed all my reserves to bitcoin because that is the only way I can protect my investment. If I have $500 in the bank I won’t get it back and I will be losing value, but when I have my bitcoin it is going up every day.”

Payment Issues

The banks have begun halting and capping Visa and Mastercard bank transactions overseas, and with that Zimbabweans have found it extremely difficult to make payments internationally. Using Bitcoin bypasses the need to get foreign currency from the banks for payments and even makes it easier to buy goods from the growing merchants that now accept cryptocurrency.

The central bank is responsible for approving overseas transactions and they’ve stated that they currently have an estimated $500 million in pending foreign payments. They also prioritize payments such as fuel and medication, making the process even slower.

Some upper class families that have sent their sons and daughters overseas for university are finding it extremely difficult to help fund them, with these pending transactions.  

An analyst setting up a Bitcoin trading desk at a local bank brought up that it may seem attractive to move everything over to Bitcoin now, but states, “Once foreigners sell their bitcoin, they won’t have a way of getting their money out.”

Featured Image: undispatch.com

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