The lack of U.S. bills in Zimbabwe has led the African nation to bitcoin trading and while this issue doesn’t actually change history, because there is not enough trade in Zimbabwe to impact the price of bitcoin, it builds some questions about the country’s economic problems and its consequences, relates CNBC.
After the hyperinflation of 2008, it seems that Zimbabwe is facing another serious currency concern. Back then, the solution was to adopt the U.S. dollar as its own, but it seems that this caused another problem – people don’t actually have enough “green” to sustain the economy. This means that a $100 bill is worth more than the digital dollars folks have in their bank accounts.
But what about the government’s solutions?
The Zimbabwe government recently introduced “bond notes” to help solve part of the issue, but they’re also trading at a lower price than U.S. dollars. This domestic quasi-currency is there to solve the lack of U.S. dollars in the country, yet it hasn’t had the expected outcome.
According to the Zimbabwe Independent newspaper Friday, there is a huge lack of liquidity in the market and companies need to import critical inputs for operations. Because the reserve bank cannot produce U.S. dollars itself, the country must import cash, destroying the economy from the inside.
So are locals tempted by Bitcoin?
Bitcoin is trading at a near $400 premium in Zimbabwe, while a local exchange Golix was trading at $9,899 over the weekend. Having no other viable alternatives, people are turning their attention towards bitcoin.
But the problem is that these spikes allow exploiting price differences between similar financial instruments. Numerous countries on the globe are looking at state control for bitcoin, but until then, we will probably witness more and more such price peculiarities.