Bitcoin in Zimbabwe is more expensive than anywhere else in the world. But even by the developing nation’s usual standards, the current dollar price is eye-watering, with BTC touching $13,500 at Zimbabwe’s only exchange. The cause for the sudden spike is easy to attribute: with tanks rolling through the capital Harare and President Mugabe nowhere to be seen, the country is in meltdown.
World War Z
Bitcoin flourishes in times of conflict, be they regulatory, market-based, or military. Whether it’s global banking crises or increasing tensions between North and South Korea, when the world is at war, bitcoin becomes a safe haven. For citizens in countries such as Zimbabwe, bitcoin isn’t just a means of electronic cash or a store of wealth – it’s a lifeline.
On November 14 it was revealed that the maligned Robert Mugabe was nowhere to be found as a full-blown military coup got underway. An army major at the head of the revolt has since appeared on national TV to confirm that the aging president, who’s been in power since 1980, is safe. That’s more than can be said for the finances of the millions who’ve endured Mugabe’s dictatorial reign.
Inflation, Meet Deflation
Hyperinflation has ran rampant through Zimbabwe on a scale not seen since the Weimar Republic years in Germany. There aren’t many countries in the world where you can pay for breakfast with a 100 trillion dollar note. Bitcoin, with its deflationary model, is the very antithesis of the Zimbabwean economy and, for a growing number of citizens, the antidote.
The country’s Golix exchange has handled over $1 million in transactions in the past 30 days – a ten-fold increase on the entirety of last year. After hyperinflation rendered the Zimbabwe dollar useless, Golix – along with many other businesses – was forced to start accepting US dollars or the South African rand.
Regulation? What Regulation?
Golix is an unregulated exchange, but in a country that ranks 154th in the Human Development Index, and whose people struggle to obtain food, gas, and electricity, that’s to be expected. Under Mugabe, Zimbabwe has been reduced to a dystopian state whose people are forced to fend for themselves. Many of them have no qualms about using an unregulated exchange to store what little assets they have.
The notion of paying over $13,000 for a bitcoin seems outlandish, but with a bitcoin divisible to eight decimal places, that still leaves plenty of scope for snapping up small units of the digital currency. In a country where 95% of the workforce is unemployed and bond notes trade on the black market, bitcoin – even at 100% mark-up – seems like a safe option.
Given that the US dollar and South African rand also trade for around twice their normal price within Zimbabwe, $13k bitcoin is within ‘normal’ parameters. The arbitrage opportunities, were Golix susceptible to such mischief, would be enormous. At the time of publication, a bitcoin on the African exchange was trading at $11,850. As shots reverberate through the capital Harare, bitcoin is one of the few safe ports in the storm that’s threatening to engulf the beleaguered country.
What do you think about the prospect of paying $13,500 a bitcoin? And do you think bitcoin can provide a lifeline for people in developing nations? Let us know in the comments section below.
Images courtesy of Shutterstock, and Golix.