Bitcoin adoption remains a possibility as Zimbabwean fiat currency crashes again

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This is the opinion of Thabo P. Ncube, a bitcoiner who went through Zimbabwe’s hyperinflation in 2008.

The Reserve Bank of Zimbabwe (RBZ), the country’s legal custodian and lender of last resort, recently “Generous“It is highly appreciated forex auction trading system in the hope of selling foreign currencies through regulated banks at market-determined exchange rates.

Zimbabwe uses a multi-currency system, 80% of its economy is dollarizedaccording to economists. The black market rate for the US Dollar (USD) has recently been twice as high or more higher than the official rate supported by RBZ.

In January 2023, the local Zimbabwe dollar (ZWL) was trading at approx ZWL$705 to $1But on June 7, 2023, just after the bank pivot, the official price was around ZWL$4,868 to $1, Just a day before, the black market rate was reported to be around ZWL$7,000 to $1,

Meanwhile, inflation rate measured month-on-month in Zimbabwe 15.7% in May 2023while annual inflation was Estimated to reach 75.6%,

Professor Steve Hanke John Hopkins University recently measured Zimbabwe’s annual inflation rate 1,298%, highest in the world,

I believe that these painful developments and many others have opened the door for bitcoin adoption in Zimbabwe, and that no one person or organization will be able to stop it.

in the wake of the financial crisis

For most Zimbabweans, 2023 will once again feel like déjà vu.

In 2008, at the height of another financial crisis, Zimbabweans lost their savings when inflation reached world-record levels (79.6 billion percent) And many including me had to carry bundles of money to buy food essentials in long queues.

The country stabilized to some extent,”government of national unityIt was formed after a disputed and violent election between the ruling party and the main opposition party. The nation fully adopted the USD And it was minted as the only legal tender. Public or private sector employees who had worked for 30 years and sometimes even more years lost their savings as the entire economic infrastructure collapsed.

Trillions of ZWL were wiped out leaving many in despair. To this day, many Zimbabweans prefer to keep their money at home, affectionately referred to as “mattress banking”, as financial institutions, government bureaucrats and politicians frustrate them. Who can blame them?

But miles away, as Zimbabweans were still adjusting to their new normal, Satoshi Nakamoto was the pioneer of bitcoin, Not only would this be a revolutionary way to transact and store value, but could, in the future, be a way for ordinary Zimbabweans to escape painful memories of 2008 and the many failures of government and fiat currencies.

constant crisis

Since 2016, another crisis is brewing.

rbz “Bond Notes” and “Coins” were introduced To assist with change while making a transaction. Only USD notes were available in the market and coins were hard to come by. Experts warned that it was a resurgence of ZWL, but RBZ denied it and defended – Current Governor, John Mangudya, Even promised to resign if the plan didn’t work,

Despite the evidence that it’s not workingMangudya given another term And this ZWL fully revived as of June 2019, Zimbabweans once again lost their savings as the government legislated that ZWL equal USD in their bank accounts. The black market for foreign exchange revived and people began paying a premium for USD notes outside the normal financial sphere. Zimbabweans have once again been lied to by those who claim to have their best interests at heart.

But they learned their lesson and, by early 2018, bitcoin was in Zimbabwe. trade at premium, At one point the price reached $17,875 while the worldwide price was close to $10,000. People were looking for ways to store their hard earned money of value and bitcoin was proving to be a viable solution.

But in May 2018, Bitcoin was effectively banned in the country Because all financial institutions were instructed to stop transactions involving bitcoins. This almost completely destroyed the local bitcoin community and sent many people looking for unorthodox ways to obtain BTC.

In June 2022, RBZ introduced gold coins as a store of value, By May 2023, It was also introducing a gold-backed digital currency., This was clearly a sign that the local currency was on its way down again.

Over 90% of tokens and gold were bought using ZWL And They can be vested in USD after a certain period, This seemed like a good way for the elite to store depreciated currency in gold while the rest of the population watched the ZWL crash every week.

Temporarily, it looked as though the gap between the demand and supply of US dollars in the market was widening and the top bank’s methods of carrying the local fiat currency were failing. People do not trust its methods, and rightly so. Unfortunately, with governments controlling the fiat money supply, these types of small and large problems will continue to exist.

As a result, Zimbabwe may be headed for another dark period. Recently, the cost of a loaf changed twice in less than a dayFrom ZWL$10,000 to ZWL$12,200.

To make matters worse, some banks has published statements limiting the use of Nostro accountscreate panic across the board and Setting up a potential bank operation, Nostro accounts are the Zimbabwean version foreign currency accounts, which has become necessary as government and private employers have started paying employees part of their salaries in USD, along with the highly inflationary ZWL. Now, it seems that government payments are not backed by actual cash.

a way to preserve value

Against the backdrop of all this, bitcoin is re-emerging as a legitimate way to store value.

via VPN, which can be used to access exchanges blocked in the country; No-KYC or KYC-lite exchanges around the world; and peer-to-peer networks via WhatsApp and Telegram, Zimbabweans are finding ways to access bitcoin. Bitcoin offers security, absolute scarcity, a commitment to accountability through a public ledger and, more than anything else, a store of value for the people of Zimbabwe. Bitcoin puts control of one’s own destiny into one’s own hands and is perfect for many Zimbabweans who no longer have to rely on politicians and bureaucrats for their economic survival. more than anything. Bitcoin is freedom, independence and individual sovereignty.

Bitcoin represents much more than hard money in Zimbabwe, and no political government can ever match its standards and security. And this time, RBZ won’t be able to stop bitcoin, as people have found ways to exist in the safety of bitcoin outside of regulated financial corridors. Bitcoin is now!

This is a guest post by Thabo P. Ncube. The opinions expressed are solely his own and do not necessarily reflect the opinions of BTC Inc. or Bitcoin Magazine.