Despite Ban of Cryptocurrency in Zimbabwe, Citizens are Turning to Bitcoin to Pull Them Out of Shortages
Bitcoin is slowly being adopted by multiple countries around the world, but Zimbabwe has been adamantly against it, banning citizens from using it within their borders. However, part of the appeal of Bitcoin is how decentralized it is, connecting people around the world.
Citizens in Zimbabwe are taking to this cryptocurrency to help them gain access to financial services that banks in the country do not provide them. With over 10 million unbanked Zimbabweans, it makes sense to protect the funds that they accrue through a digital platform, and they seem willing to take the political risk.
Cryptocurrency is quickly finding many use cases, like one citizen who has been able to pay his rent with Bitcoin in Bulawayo. Options like this one are exactly why the locals want to have access to Bitcoin, considering their lack of foreign currency and bond notes. This country has not even had its own country in almost 10 years, which was due to the 230 million percent hyperinflation at the time. This was the same year that Bitcoin was developed.
This transition caused a widespread effect on the way that the country handled money. There are many traders and businesses that will provided discounts for individuals that use cash in USD or bond notes. However, due to the fluctuations in local money, the same entities tend to charge more for consumers that want to use a card or a mobile form of payment.
There is a major cash crisis in the area right now, which has led many people to head to their banks to secure currency, making Bitcoin a more helpful option. With Bitcoin, there is not presently a shortage, which means that Zimbabweans have the option of paying for goods and services with the same benefits as USD currency.
The other issue in the economy is the forex crunch, which means that there is no way for people in the area to pay for goods or services without bond notes. Though the Reserve Bank of Zimbabwe says that the bond notes are exchanged at a 1:1 ratio, it is actually much less beneficial. Right now, the dollar is actually selling at about 85%.
Surprisingly, there is already a platform established for locals that need to pay fees to study abroad with cryptocurrency, which is called Study263. Since being established, there are now thousands of users that are trying to get around the multiple efforts of the RBZ to restrict them. Co-founder Tinashe Jani said,
“We don’t only use bitcoin but any other available cryptocurrency – they are cheaper, faster, and in Zimbabwe’s situation it (bitcoin) works now that card payments do not work out of the country anymore.”
Adding to the comments, Jani noted that the organization has been able to help with over 900 transactions since it originated, with some as low as $10, and some higher than $10,000. These services have proven to be incredibly necessary, considering that there are presently banks like Stanbic that charge user up to $10 for the exact same thing.
Jani noted that his company has received requests for services that are not yet offered, like “someone asking us to give Rand to their siblings who cannot have access to bitcoin in Zimbabwe or South Africa.” Study263 requires a payment of 3% of the transferred funds right now.
Most investors are aware that even the most trustworthy cryptocurrencies, like Bitcoin, Ethereum, and Litecoin, have been banned in this country. The decision made headlines, considering that they were formerly a major part of the market in Africa. However, the RBZ decided to shut down this option in May for two exchanges that were helping citizens purchase and sell cryptocurrency – Golic and Styx24.
During the shutdown, the RBZ claimed that these two exchanges were in violation of the laws established by Exchange Control. Additionally, they were allowing users to make deposits, which is also against regulations. Upon learning about the goal of a $32 million token sale a couple of months ago, central bank governor John Mangudya called the project a “pyramid scheme.”
Despite these allegations, Golix is ready to go head-to-head with the ban in the High Court.