Ban of the US Dollar & Foreign Currencies Driving Bitcoin Demand in Zimbabwe

  • New Zimbabwe dollar is making a comeback
  • Government bans use of foreign currency
  • Bitcoin demand in rise, all the activity happening in dark markets

Ten years ago, Zimbabwe scrapped its national currency after the inflation rate climbed astronomical levels. Now, a decade later, the Zimbabwe dollar is making a comeback. But Zimbabwean expect the new currency to tank.

Just late last month, the government abruptly banned all transactions be paid with the US dollar, the euro, pound, South African rand or any other foreign currency, which has been in use since the collapse of its national currency.

The government is trying to curb re-dollarization of the economy as workers’ unions demand salary payments in foreign currency. Last week, Finance Minister Mthuli Ncube told Parliament that the move was to help the poor who lack access to foreign currency.

Lot of Demand for Bitcoin, All the Activity happening in Dark Markets

This is driving the Zimbabweans to bitcoin. As the country’s economy continues to struggle and President Emmerson Mnangagwa’s government further bans the use of foreign currencies for settlement of local transactions, Bitcoin and other cryptocurrencies are being used to plug the liquidity gaps.

Investors and speculators alike are turning to bitcoin as a stable store of value than the new Zimbabwe dollar that is facing uncertainty.

The price of Bitcoin in the country’s local currency has surged. Earlier last week we saw one BTC price in Zimbabwe surging to $76,000.

Over the last week, traders have been using Paypal, Western Union, and Moneybookers for bitcoin trades. Local mobile money service Ecocash is also being used for peer to peer level bitcoin trading as there are no local exchanges to facilitate cryptocurrency transactions.

“What we are seeing is that there is a lot of demand for bitcoin,” said Tawanda Kembo, CEO and founder of the Golix crypto exchange that was affected by the central bank’s directive to ban exchanges from crypto trading. “And there is little supply compared to demand so all the activity in bitcoin which we are seeing is happening on dark markets instead of exchanges.”

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