With Bitcoin trading at $13,499 on Golix, the chaotic environment in Zimbabwe has spread to the global price of the cryptocurrency driving it beyond $8000 for the first time in history as President Mugabe fails to resign in a national address following the nation's coup.
It appears many Zimbabweans have found an alternate way to store/transfer wealth away from Mugabe's prying (and confiscatory) eyes.
In September we noted the hyperbitcoinization occurring in Zimbabwe. In October, Zimbabwe demand started to impact the global price of the cryptocurrency, and two weeks ago we noted the doubling of the price of Bitcoin in Zimbabwe as uncertainty about the nation's stability sent citizens into a decentralized currency that was out of Mugabe's reach.
Now, after the 'successful' military coup but failure of Mugabe to resign – as expected – Bitcoin is trading at over $13,499 on Zimbabwe exchange Golix – a premium of over 80% over the USD exchange price as demand surged.
As CoinTelegraph reports, the Zimbabwean army assaulted Harare on November 14 following a week of confrontation with the administration of President Robert Mugabe. According to the army, the move was aimed at preventing an expected violent and deadly civil war in the country. Mugabe has been the country’s head since 1980.
Due to the political crisis, the demand for Bitcoin in the country has skyrocketed to new highs because of a shortage of hard currency. The situation was exacerbated by the lack of national currency in Zimbabwe. In 2009, the country’s government adopted several fiat currencies like the US dollar and South African rand as a legal tender after hyperinflation turned the local dollar virtually worthless.
According to Golix, it has processed over $1 million worth of transactions in the past 30 days, a sharp increase from its turnover of $100,000 for the entire year of 2016.
According to Golix co-owner Taurai Chinyamakobvu, the prices for Bitcoin are determined by supply and demand. The sellers of the digital currency are paid in US dollars that are deposited electronically. The money, however, can only be converted into hard cash at a sizeable discount on the black market.
On November 15, an “electronic” dollar can purchase around eight South African rands, compared with the market exchange rate of 14.32 rands.
According to a local trader, bitcoin isn’t just being bought by individuals, but by businesses with bills to pay.
Bitcoin, as every bitcoiner would expect, is helping people in the country survive times of economic uncertainty, as Zimbabwe has been embroiled in a crisis for years.
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As CoinTelegraph noted previously, Zimbabwe is beginning to act like an interesting case study for what happens when a country begins to collapse around its monetary system – it is also being witnessed in Venezuela.
Moving money out of Zimbabwe is starting to become impossible, and as people try and flee monetarily out of the crumbling state, they are finding refuge in Bitcoin.
Soon, banks in Zimbabwe have stated that Visa debit cards would no longer be usable for international payments without prior arrangements and pre-funding with hard currency.
“You will be required to make prior limit arrangements with the bank,” Stanbic said in a message to depositors last week.
Econet Wireless has also stopped foreign payments on its MasterCard linked EcoCash mobile money debit card.
Bitcoin as a refuge
Because of the decentralized nature of Bitcoin, there is no impact on it from this political upheaval, in fact, it is only benefiting from it. The Bitcoin premium of almost 100 percent is not because of the political issues, rather the high demand surrounding worry of collapse.
Bitcoin again shows its potential and power when the banking system again shows its potential for mass collapse and hysteria.