21 Aug, 2021

Zimbabwe’s Economy Thriving On Bitcoin Despite the Ban

Zimbabwe’s government might have banned cryptocurrencies a few months ago, but Bitcoin is turning into best friend of Zimbabweans as their nation struggles with the worst financial crisis in years. From rent to bills to other household expenses, everything is being paid with Bitcoin. Due to its inherent characteristics, Bitcoin has made the cut as a perfect means of exchange for 10 million Zimbabweans who don’t have access to basic banking services. And to the banked people, it’s even more beneficial as it provides protection against bank runs, inflation, and political turmoil. Sounds interesting? Then let’s have a deeper look at it.

The problem of Zimbabwe

Zimbabwe is currently facing a duo of problems. First is the lack of adequate forex reserves to pay for the imports, and the second is a shortage of surrogate currency called bond notes that were launched by the central bank after a steep decline in the value of their national currency. Zimbabwe had given up on its own national currency way back in 2009 after the peak hyperinflation of 230 million percent and had allowed the usage of US dollars, South African Rand, Pound Sterling, Euro, Indian Rupee, Renminbi and Australian dollar in the country. It had also launched its own bond notes pegged against the US dollar in a 1:1 ratio. However, those bond notes are no longer pegged against USD in the same ratio as their demand has far surpassed the supply. They’re now selling at an 85% premium in Harare.

Bitcoin: The solution

Now, as Zimbabwe battles with this currency crisis, Bitcoin has emerged as the solution of choice. And why not – it’s cheaper, faster and better than fiat currencies for most use cases. Josh from Bulawayo, the 2nd largest city of Zimbabwe, told Bitcoin News that paying his rent with Bitcoin was a great experience. He sent 0.02281 BTC to his crypto-friendly landlord, which is equivalent to $120 based on current market prices.

Similarly, Study263, a platform that was originally created to help Zimbabweans studying abroad pay fees with cryptocurrencies, is also witnessing a spurt in growth as people try to use its service for circumventing the restrictions imposed by country’s central bank on crypto transactions. Company’s 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. We often receive requests for services that we don’t provide. Like someone asking us to give Rand to their siblings who cannot have access to bitcoin in Zimbabwe or South Africa.”

Study263 obliges with all these requests after charging a fee of 3%. On the other hand, Josh and many other tenants like him are considering to keep using Bitcoin for paying their rent and bills. In short, Zimbabwe is all set to ride the crypto wave in a manner that Reserve Bank of Zimbabwe (RBZ) might not have imagined ever!