When Emmerson Mnangagwa became the president of Zimbabwe by replacing Robert Mugabe through a coup in 2017, everyone hoped that things will take a better turn. But with Zimbabwe’s economic crisis getting darker with each passing day, the people of the country are fearing the worst.
The World Food Program has added that up to 4.7 million citizens could be affected by starvation by the end of this year. The supplies of petrol and diesel are running short with kilometre long queues being reported in some areas. The Government has even stopped issuing passports as it does not have enough foreign currency to pay for the special inks and paper necessary for such documents.
Apart from the skyrocketing inflation, a severe draught has added to the country’s woes by worsening the shortage of food . The lack of reserve has caused the newly introduced Zimbabwe dollar to suffer drastically and with the Government having banned the use of foreign currencies, Bitcoin use in Zimbabwe is on the rise.
Binance CEO CZ recently expressed his views on the scenario in Twitter while stating the effectiveness of cryptocurrencies in such scenarios.
Assuming $100 bills to begin with, 1 more digit means they took away 90% of your money, 2 more digits means taking away 99% of your money, and so on…
Existence of a 5 billion note means they took away 99.99999% of your money! Sad, no?
Still hesitating to buy/use crypto? https://t.co/nnVnr1EFDF
— CZ Binance (@cz_binance) August 11, 2019
The country also had one trillion Zimbabwean dollars flooding its market at one time.
Zimbabwe has been one of the most active nations in Africa for cryptocurrency trading and also boasts of one of the first crypto exchanges of the continent. The price for Bitcoin in Zimbabwe has been surging and it is currently trading at around 5 percent higher than the global average. While many crypto-critics consider Bitcoin as too volatile in a stable economy, the scenario is reverse in Zimbabwe. The people of the country are resorting to Bitcoin as a safer option rather than the local currency.
Though the Reserve Bank of Zimbabwe has banned all types of cryptocurrency transactions, peer-to-peer transactions via various mobile services is still ongoing. Even with the destabilized economy, monthly trade volumes of the Golix crypto exchange have increased in the last few years.
This is a trend that has also been noted in other countries like Venezuela, Turkey and Iran which have been affected by an economic meltdown and Bitcoin has replaced the national currencies.
The real-time gross settlement dollar, or RTGS was introduced by the government early this year but it failed to revive the situation. In June, the country even planned to adopt the South African rand but the negotiations could not be worked out. With the current inflation rate of 546 per cent a year, the government employees of the country are organising protests in demand for salary adjustments.
Even though Bitcoin fans are hoping that such scenarios will enhance the currency’s reputation, experts feel that isolated events of high cryptocurrency trading in countries such as Zimbabwe are not significant enough to affect the global volumes.
