Zimbabwe, facing massive hyperinflation turns to Bitcoin – prices soar on local exchanges.
Bitcoin is trading at a huge premium on local Zimbabwean exchanges, as the embattled country struggles through another bout of hyperinflation. At press time, BTC was selling on the local exchange, golix.com, at $12,500. The substantial premium – nearly double the price in the US – is likely connected to the difficulty in obtaining access to other international exchanges.
The country has been in the news in recent years for its massive levels of inflation, often creating situations where locals are forced to carry entire backpacks of Zimbabwean dollars to the market for some simple groceries. In an economy where such inflation rapidly devalues whatever funds consumers have an externally fixed currency like Bitcoin creates a stable and usable marketplace where none existed before.
Creating new markets
Market forces in nations with weak or very weak fiat currencies are driving prices for Bitcoin, as tens of thousands of new users capitalize on the ability to exchange goods and funds in a simple and clean way.
Obviously, the market at this stage represents an arbitrage nightmare, depending on which side of the transaction a consumer is on. However, the clear use case should give hope to Bitcoin bulls, looking to see the price increase to higher levels.
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Author: Jon Buck