Zimbabwe’s failing currency leads citizens to seek solace in crypto

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Zimbabwe’s economy has been on a downward spiral for the better part of the last decade. Previous president Robert Mugabe was ousted from his seat at a time when the country’s inflation rate was setting new global records. The current president, Emmerson Mnangagwa, has attempted to reinvigorate the country’s economy, but he is yet to succeed in his quest. His biggest move so far has been the banning of foreign currencies and this has greatly backfired, leaving the people to rely on the more stable alternative: cryptocurrencies.

The need for a currency with international acceptance has never been bigger in Zimbabwe. Previously, the country abandoned its local currency and turned to the U.S. dollar, the British pound and other global currencies. However, these currencies banned, the people have found it difficult to cope. The situation has been especially difficult for retailers who sell their goods internationally as the Zimbabwe dollar has little value outside the country.

Speaking to a local outlet, one of the traders revealed that they are turning to cryptos. Dennis Kadengu told VOA News, “Bitcoin, I think, is the safest cryptocurrency, and in terms of safety, you can have a large amount of money in equivalent to U.S. dollars or euros, having it on your person, moving it around even in seconds which is very beneficial rather than carrying a large bag of U.S. dollars on person.”

While the country reissued the local currency in June to revive the local economy and reduce dependence on other countries, the age-old challenge of inflation is yet to be solved. According to Bloomberg, “the prices of food, clothing, furniture and health care all surged by more than 200% in June from a year before and the monthly inflation rate was 39.3%.”

Zimbabweans have flooded local crypto trading platforms. According to one report, the surge in demand briefly drove the price of SegWitCoin (BTC) on P2P trading platform LocalBitcoins to over $100,000. At press time, the price of BTC stands at $10,300, a 4% premium.

Local crypto exchange Golix has also seen a spike in trading volume, with the clients also requesting for extra services such as funds transfers and e-commerce. The exchange’s director Confidence Nyirenda told VOA News:

So, we have seen a lot of people coming to us saying, ‘l want to move X amount of money’ or ‘l want to purchase a car in Japan,’ stuff like that, and we are accommodating them. So, it’s really a huge advantage to our side and l think also it will enhance our business in the long run.