Although most of the world’s investors in cryptocurrency choose to buy crypto assets in spite of their volatility, some crypto users are actually using cryptocurrency assets as a ‘safe haven’ for their funds. According to a report from Reuters, residents of Zimbabwe have turned to cryptocurrency as a safer alternative for wealth storage and investment.
The report explained that some Zimbabweans “are turning to bitcoin out of desperation as their bank deposits lose value almost by the day”. Bitcoin has also been used by Zimbabweans for a variety of practical financial needs, like “funding family members studying abroad.”
President Robert Mugabe Encourages Crypto Investment Despite Volatility
Practically, this has had a rather shocking effect on the price of Bitcoin in Zimbabwe. The rest of the world’s eyes popped when Bitcoin hit an all-time high of nearly US$8000 over the weekend. However, the high volume of trade on the Harare-based exchange Golix.io pushed the price of Bitcoin as high as US$13,900 over the same time period.
Despite the widespread warnings from governments and established financial institutions all over the world that the cryptocurrency markets are a bubble that could pop at any moment, Zimbabwean President Robert Mugabe is urging the citizens of Zimbabwe to take risks.
Zimbabwe has faced significant financial troubles over the last ten years. The country adopted the US dollar in 2009 after an extended period of hyperinflation that rendered the Zimbabwean dollar virtually valueless. However, the country is now facing a shortage of cash; citizens are forced to buy dollars with ‘zollars’, electronic units of value that are quickly depreciating.
In a report by CryptoCoinsNews, economist Vince Musewe said that although the financial crisis in Zimbabwe has not exactly been “alleviated”, it has changed shape over the years: “Then, there was plenty of cash money, but no goods in the shops. Now, there are goods on the shelves but no money to buy them with.”
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34-year-old father of two Manhizwa told Reuters that Bitcoin has been a financial saving grace. “If I have $500 in the bank I won’t get it back and I will be losing value, but when I have my bitcoin it is going up every day.”
Crypto in Africa: Financial Services for Underbanked Regions
Cryptocurrency has played an interesting role in certain areas of the African continent as an alternative to traditional banking and financial systems. For underbanked regions, cryptocurrency acts as a means of storing and transferring wealth, as well as an investment opportunity.
Crypto in Africa has been compared to mobile phones on the continent. Mobile phones have been widely adopted, but landline phones never were; the cumbersome nature of their infrastructure was unsuited to rural areas in Africa. The same can be said of traditional brick-and-mortar banks. The lightweight nature of cryptocurrency provides individuals that lack access to financial institutions.
As more kinds of cryptocurrency and crypto-related services continue to be developed, the African market will certainly present some serious opportunities for developers and investors alike.