Bitcoin surges in Zimbabwe amid currency crisis

Source: Bitcoin surges in Zimbabwe amid currency crisis | The Financial Gazette November 2, 2017

By Omega Ukama, Staff Reporter

MAINSTREAM cryptocurrency, Bitcoin, is trading in Zimbabwe at nearly double its price on international exchanges, driven by a currency crisis in the southern African country.
Bitcoin is a decentralised digital payment system which works without a central repository or single administrator.

Yesterday, Bitcoin traded for as high as $11 650 on the local cryptocurrency exchange, Golix (formerly Bitcoinfundi).

This represents a premium of more than 75 percent to the price of $6 600 recorded on American mainstream cryptocurrency exchange, Coinbase, yesterday.
The premium on the digital currency in Zimbabwe can be attributed to the discount on the local currency.

Although Zimbabwe dollarised in 2009 after its currency was ravaged by hyperinflation, the country effectively now has a new currency, electronic bank balances which are heavily discounted against the greenback.

Since early 2016, Zimbabwean firms and households have increasingly struggled to make international payments due to a biting foreign currency crisis.

Of late, this has given rise to the use of Bitcoin to settle cross-border transactions.
This comes as the country’s central bank has effected stringent controls on foreign currency movements across the borders.

Many Zimbabweans are using Bitcoin to pay for motor vehicle imports, as some Japanese used car traders accept the cryptocurrency for payment.

Research suggests that Bitcoin adoption is more widespread in countries that have suffered financial crises such as Zimbabwe and Venezuela.

In 2014, economic historian Dr Garrick Hileman of the University of Cambridge ranked Zimbabwe third on a Bitcoin Market Potential Index, which he designed to assess the condition of adoption for Bitcoin, he ranked Argentina and Venezuela first and second on the same index.

Based on the average price during the day, the order book on the local exchange early afternoon yesterday had bids of Bitcoin volumes amounting to about $29 000 and offers of the same amounting to about $16 000.

Total turnover of Bitcoin on the local exchange from mid-day Tuesday to mid-day yesterday amounted to about $90 000. The turnover for the month of October amounted to $1,2 million.
Meanwhile, Bitcoin reached its highest price ever in exchanges across the world (outside Zimbabwe) as the digital currency traded for more than $6 600 on Coinbase. Bitcoin has gained $5 790 or 799,84 percent since November last year.