In the confusion and concern surrounding the potential for hyperinflation to affect Zimbabwe, bitcoin has become a viable and popular means of transacting with regards to big ticket items, driving the price of the cryptocurrency on the local exchange.
The price of bitcoin on Zimbabwe’s exchange, BitcoinFundi, was trading at a 85 percent premium at $7,200 per bitcoin on Wednesday, according to Cointelegraph.
The current premium on bitcoin in Zimbabwe is a direct result of difficulties in transacting via traditional means such as cash and cards, due to economic government controls.
Bitcoin, the world’s largest blockchain, was trading internationally at around $4,070 on Wednesday, September 27, displaying the significant difference between the BTC/USD exchange rate and that available in the southern African country, according to Coindesk.
Zimbabwe experienced severe levels of hyperinflation in 2008, and signs seem to be pointing to a similar situation at the moment.
Food and fuel shortages in the country saw people lining up for hours in attempts to purchase some of these scarce items, mirroring tough times that remind many of nine years ago.
The country’s government banned credit card transactions and limited international fund transfers, forcing Zimbabweans to look elsewhere when purchasing more expensive items such as cars.
Those in Zimbabwe are desperate to get value for their money, so numerous people are investing in U.S. dollars, while many are buying bitcoin in vast amounts, reports Techjuice.
This has therefore caused an increased demand for bitcoin, which has led to the significant increase in its value.
Peter Mutasa, president of trade union, Zimbabwe Congress of Trade Unions, explained the dire economic situation in the country, which is responsible for the recent demand for bitcoin.
“It has become very difficult for the public to access cash from banks. People are not even accessing their salaries and the worst scenario is that pensioners, some as old as 80, are sleeping outside banks,” said Mutasa, according to Quartz.
At the time this article was published (Thursday), the bitcoin price on BitcoinFundi had stabilized somewhat to $6,000, representing a premium of approximately 43 percent, with the BTC/USD exchange at around $4,200, according to XE.