Earlier this week, the Bitcoin price made history when it peaked at an international average of $6,634.
Bitcoin has never been a more attractive investment option for prospective investors worldwide, despite the fact that some investors are wary of the high prices required to get a foot sufficiently in the door. However, in markets with dilapidated economies, such as Zimbabwe, Bitcoin may prove valuable, and perhaps essential, in helping the country to restore some stability to their economy.
Zimbabwe has also been considered as one of the leading drivers behind the growth rate of Bitcoin.
Zimbabwe, as well as other unstable or developing economies, is a veritable hothouse for a decentralized currency such as Bitcoin. In their markets, Bitcoin is often traded at prices far exceeding the international average, due to a high demand as their economies continue to crumble.
Currently, the world’s priciest Bitcoins can be found on the Zimbabwean cryptocurrency exchange platform, Golix. Earlier this week one Bitcoin was for sale for prices reaching up to $13,000. This puts the Zimbabwean price 84% higher than the global average. Since October 20, the Zimbabwean Bitcoin price rose $2400, whereas the worldwide average rose $1000.
Zimbabwe has a long troubled history when it comes to its economic development, or rather, lack thereof. During 2009, the Zimbabwean government opted to replace the country’s very own Zimbabwean Dollar with the US Dollar, after the Zimbabwean Dollar became subject to such severe inflation that the Zimbabwean Central Bank was forced to issue 100 trillion dollar notes.
Despite this move, the country does not have sufficient US Dollars moving through it to meet the country’s demands. While the government has issued bond notes, which hold the same value as US Dollar, these have fallen into disuse and are mostly exchanged on black markets, since most foreign countries do not accept them.
To address this, local banks have rationed US Dollars. Earlier this year, CCN reported that most Zimbabweans would willingly stand in ATM lines for several hours, for the slight chance of withdrawing minimal amounts from their accounts.
The unstable economy has led many Zimbabweans to turn to Bitcoin.
According to a Golix coordinator, Yeukai Kusangaya, users can purchase Bitcoin using electronic bank transfers, which makes it much more convenient for Zimbabweans. This means that the Bitcoin trading industry is largely unaffected by the country’s lack of physical cash. Once a user wants to sell their Bitcoin, they can do so via a peer-to-peer trade.
While some experts have speculated that the government might choose to implement bans on cryptocurrencies, or at least restrict its regulation policies, others have noted that the state lacks the means to do this. According to the Zimbabwean technology analyst, Nigel Gambanga, the economic situation is in such disrepair, that the government is more likely to embrace the possibilities of Bitcoin, and might even declare it as legal tender.
Gambanga stated that Bitcoin could prove a solution to the country’s currency problems. This could mean that the central bank might become much more active in cryptocurrency activity in the future. However, Gambanga also cautioned that the Zimbabwean government is infamous for its bizarre decisions, such as banning all fruit importation, which means that prohibiting cryptocurrency might also be unsurprising.