Bitcoin Is Actually Worth $12,400 (In Zimbabwe)
Bitcoin has knocked out multiple record highs this week, but for emerging markets, prices are going through the roof. Case in point: Zimbabwe, a country that has struggled mightily with hyperinflation.
The Zimbabwe Premium
Bitcoin (BTC/USD) surged past $6,700 on Wednesday en route to new record highs. While this may seem like too much in the highly liquid markets of North America and Europe, it’s a bargain compared to other parts of the world.
As CCN reports, most expensive bitcoin tokens found on the Zimbabwean exchange of Golix, where prices were last seen trading around $12,400. That’s a nearly 90% premium over the global average.
Our members probably remember reading about Zimbabwe’s experience with hyperinflation, which led to the adoption of the U.S. dollar in 2009. Policymakers quickly found that replacing 100 trillion dollar notes with the greenback was a lot easier than dealing with a massively depreciated local currency.
That being said, Golix maintains that the premium paid for bitcoin has nothing to do with the country’s cash shortage. However, observers say that the growing popularity of digital assets could lead to a government crackdown as central agencies look to keep a tight lid on capital controls.
Zimbabwean technology analyst Nigel Gambanga recently told CCN that the central bank may revise its position on cryptocurrency “if trade in bitcoin intensifies with no resolution to the country’s currency woes.”
Zimbabwe’s economy has emerged from recession over the past nine years or so, but growth has slowed to a crawl. Gross domestic product (GDP) – the value of all goods and services produced – expanded just 0.6% in all of 2016. That’s less than half of the 1.5% expansion in 2015 and a mere fraction of the 2014 rate of 3.9%. The economy produced double-digit percentage growth between 2010 and 2012.
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