Inflation and rampant demand for Bitcoin in Zimbabwe have made the crypto-currency skyrocket to $7,200 while in other parts of the world it's worth an average of $4,300 at time of writting.
When your country is inflation prone and you are constantly in fear of losing your personal savings unexpectedly, you are more likely to welcome Bitcoin with your two arms wide-open.
Zimbabwe's tragic woes
Zimbabweans have been going through a very tough time for a long time. The country's economic woes have a long history and the future doesn't look so bright. Massive, incessant inflation had made its currency worthless and President Robert Mugabe's government doesn't seem to know how to turn things around.
In 2008, hyperinflation wiped many personal savings, rendered shops empty and made rich men poor. Before it was abandoned in 2009, 250 trillion Zimbabwean dollar was not enough to get a candy bar. It suffered a 500 billion percent inflation before it was discontinued. The economy hasn't recovered since then.
Last year, the government introduced "bond notes" which, in theory, are worth the same as US dollars, but inflation is creeping in through arbitrage and the greed of exchangers. Usually, $1 is worth 1 bond notes but some exchangers are selling at a higher price.
At the moment though, Zimbabwe is going through a very rough patch in comparison with other tough times. There is a shortage of cash, basic amenities, food, fuel, and people are doing trade by barter. There are fears a civil unrest is on the way.
That's how bad things are.
In a bid to retain the value of the money they are holding in their pockets, Zimbabweans resorted to holding onto things that won't depreciate in the near future. They hoard petrol, food, medical supplies, other commodities, and now Bitcoin.
Since Bitcoin is a global currency, the demand for Bitcoin is very high and it is really scarce. This demand has made the price of Bitcoin in Zimbabwe to reach levels over 70% higher than in the rest of the world.
At the moment of writing this article, BitcoinFundi, a Bitcoin exchange in Zimbabwe, is selling Bitcoin for $6,646. A few days ago, it was $7,200 and has a high of $7,600 and a low of $6,500. However, about 8.2 Bitcoins were traded in the last 3 days on BitcoinFundi, with 76 BTC traded in the last month.
Zimbabwean local Bitcoin dealers, on the other hand, sell Bitcoin at a price which resonates well with the global average. However, there are a number of restrictions- you can't buy more than a certain amount and you can only do business via PayPal, Skrill or Moneygram. If you aren't okay with these terms, you go to BitcoinFundi and pay more.
Bitcoin to the rescue?
Many argue that Bitcoin could be the savior for Zimbabweans, and this is quite logical.
Amidst intense economic hardship and super inflation, buying and holding Bitcoin will save you from losing your money's worth, since Bitcoin is not vulnerable to inflation. All you need to do is get your hands on Bitcoin and hold. That way you won't lose your savings unexpectedly through inflation.
This sends a message to citizens of other nations facing similar economic conditions as Zimbabwe (or having an economy in decline). It would be wise to hold some Bitcoin now before your currency loses a chunk of its value.