Bitcoin prices have topped $10,000 over the past week, fueled by soaring demand and particularly, the crisis brewing in Zimbabwe. People around the world, especially in Africa, recognize the value of virtual currency when there’s a lack of trust in their government. Back in 2009, the same year bitcoin was created, Zimbabwe gave up its currency after several unscrupulous politicians thought they could continue printing money to get the economy out of a slump. Back then, the Reserve Bank of Zimbabwe began issuing $100,000,000,000,000 during the last few days of hyperinflation. Today, Zimbabwe uses the U.S. dollar, the South African rand, and digital money.
What is bitcoin?
Bitcoin is a virtual currency that is backed by absolutely nothing! Whereas, the U.S. Dollar and the British Pound are national currencies that are backed by the gold reserves of these countries and linked to their GDP. People buy and sell bitcoins on a secure peer-to-peer network that doesn’t rely on any government or central bank.
Virtual currencies are stored in an electronic wallet, also known as an e-Wallet, which is a digital system that allows payments online via a computer or mobile device such as a smartphone. Today, there are far more cellphones in Africa than people with bank accounts. That makes Africa the perfect market since, for bitcoin, all you need is a phone.
Bitcoins have become a trendy alternative to hard currency. Additionally, we can speculate that the time is rapidly approaching when safe and secure systems for payment will use virtually no money at all.
Currency, or money in general, is typically defined as having three primary functions: a medium of exchange, a unit of account, and a store of value. Virtual currency is an electronic medium of exchange that can be bought or sold through virtual currency exchanges and used to purchase goods or services where accepted.
Residents, especially, of Zimbabwe, where the annual accumulated inflation rate is 242.72 percent, continue to rely on Bitcoin.
In Africa, converting bitcoin to the local currency is often handled by local entrepreneurs, either with licensed change points similar to Paris’s La Maison du Bitcoin, or, on a smaller scale, an individual with a mobile phone and a pocket of cash.
The price of the digital currency has soared beyond $10,000 over the past week on Harare-based trading platform Golix, almost double the rates on major international exchanges. “The price has been high for some time, and it keeps going up,” says Golix trade coordinator Yeukai Kusangaya. She expects soaring demand to drive the price even higher. Bitcoin is no longer a specialist curiosity in Zimbabwe. The virtual currency is in increasingly common usage, even accepted by businesses such as car dealers.
A uniquely dysfunctional economy has created ideal conditions for the bitcoin surge.