In late June, Zimbabwe re-introduced the Zimbabwe dollar, nearly a decade after abandoning it. The newly minted currency brought with it a ban on the US dollar, British pound, South African Rand, Botswana Pula, and a host of other foreign currencies.
The struggling economy's only legal tender is now the Zimbabwe Dollar, but that hasn't stopped Zimbabwean's from transacting Bitcoin. Nor has the country's ban on cryptocurrency exchanges.
Peer-to-peer transactions of Bitcoin are surging in Zimbabwe as the country's economy faces an uncertain future. Mobile money platform, EcoCash, which handles 99% of cash-in transactions in Zimbabwe, is the gateway of choice for most looking to move their USD to Bitcoin and other cryptocurrencies. Amid Zimbabwe's policy reform, EcoCash saw 11.5% growth in the first quarter of 2019.
With minimal liquidity following the government's ban on crypto exchanges, Zimbabweans have been forced to pay a premium for crypto. Tawanda Kembo, CEO and founder of Golix, a Zimbabwe-based crypto exchange, told Quartz Africa, “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.”
Despite the risk of transacting on dark markets and high prices, Zimbabweans are turning to Bitcoin as a more stable store of value than the Zimbabwe dollar. Bitcoin has become so popular that the South African country has grown to be one of the most active crypto markets in the world.
The Power of Peer-to-Peer
The most exciting aspect of this story isn't that people in unbanked countries are turning to Bitcoin as a safe store of value, it's that they're able to do so despite bans on both crypto exchanges and stable fiat onramps. Without the use of a national currency or a bank, people are transacting with other people in a country steeped in economic uncertainty, and that is one of the many powers of cryptocurrencies.
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