Why the Zimbabwe Crisis Doubled The Price of Bitcoin

Bitcoin reached $ 13,000 in the Zimbabwean exchange.

The political crisis and an apparent coup have brought the price of Bitcoin to $13,000 in the digital currency exchange in Zimbabwe, almost double the current rate in world markets.

Bitcoin has long had high prices in Zimbabwe, which scrapped its local currency in 2009 after years of hyperinflation that left it worthless.

But the appearance of tanks on the streets of the capital, Harare, has further increased the price gap. Bitcoin was being traded in international markets for approximately $7,500 this Thursday.

The high Bitcoin prices in Zimbabwe appear to be the result of the country’s dysfunctional economy and a supply and demand that does not match.

Since 2009, businesses in the country have been operating in several foreign currencies, but the exchange rates in the thriving black market are highly distorted. Dollars are scarce and strict capital controls are in effect.

Last year, the country began printing bond notes – backed with US dollars – in an attempt to alleviate a chronic shortage of cash. But many Zimbabweans feared that these were a back door to reintroduce a local currency that would be condemning them to a massive devaluation.

“In Zimbabwe you are very limited with what you can do with the money you have in the bank,” says Golix on his website. “Bitcoin is better than the currency and we are using it.”

There is also the problem that local Bitcoin demand far exceeds supply.

Only 16 Bitcoins have been commercialized in Golix in the last 24 hours and more than 160 in the last month.

Bitcoin is created through “mining,” a process in which computers struggle to solve complex mathematical problems, and winners are rewarded with chunks of the digital currency.

Mining requires large amounts of electricity, and Gloix says that energy prices in the region are too high for the process to be profitable.

“Bitcoins circulating in Africa belong to people who sell them in other places,” the company says on its website.

However, Golix does not allow Bitcoin sellers to withdraw their cash.

You May Also Like

mm

About the Author: BJ Hetherington

BJ is the lead editor of Crypto Post Gazette. Fluent in French and proficient in Spanish and Arabic, he focuses on mobile trends and tech innovations. BJ is a graduate of York University In Toronto. BJ was an early adopter of cryptocurrencies having bought 100 bitcoins in 2010. To contact BJ, just click here

Leave a Reply

Your email address will not be published. Required fields are marked *