Topic: Why is BTC at $10,000 in the USA and also at $76,000 in Zimbabwe? - page 2. (Read 566 times)

That's exactly what the government did. There is a large African exchange called Golix which used to trade pretty large volumes in Zimbabwe, which has had to shutdown their operations in the country. They have had their fiat accounts frozen, and have even stopped operating their bitcoin ATM in the capital, Harare. The vast majority of international exchanges like Coinbase, Bitstamp or Kraken, don't accept accounts from Africa. From what I've read, it seems some are travelling over the border to South Africa and buying there - these may well be the same people who are offering to sell on localbitcoins for $76,000.

The real irony is the government made bitcoin illegal because of its potentially "destabilizing effects" on their financial system.

What's stopping them from just getting bitcoin on a regular exchange? Is the access to non-governmental internet prohibited? Is the access to a computer at all kind of rare? Many have cell phones these days, even people in 3rd world countries. Seems like bitcoin would be hard to stop there without just outright making it illegal. With the worldwide interconnectedness I don't understand why the large price differential, seems like (assuming access to electronic accounts) they could just buy at the regular world market rate for bitcoin.

After reading @o_e_l_e_o replies I must say if Zimbabwe government were wise, accepting bitcoin as their country's Currency could be a starting ground for solving the country's problem as bitcoin can't be affected by inflation. Country's like these are perfect example of why bitcoin is the solution to the worlds currency inflation problem. After doing so, then the government can shift thier focus to developing the countries economy and fighting corruption to better the country. The US Dollars is been given too much power and as far smaller country still look up to the USD to determine the value of their currency the rate of inflation of those currency will continue increasing.

Our local Naira is been affected yearly by inflation too currently it's been exchanged around $1 = N350 +/- that's why most genuine Nigerians are getting attracted to bitcoin as for every $1 gained we get around 350 +/- naira.  Which means we get twice profit, one for holding bitcoin (Price increase) and second for exchanging USD to Naira

In summary:

The Zimbabwean dollar goes through massive hyperinflation and is re-denominated 3 times. First in 2006 at 1000:1, then again in 2008 at 10,000,000,000:1 (ten billion to one), then again in 2009 at 1,000,000,000,000:1 (a trillion to one), meaning 1 dollar of the final re-denomination is worth 10²⁵ dollars (10 septillion dollars) of the initial currency.
In January 2009, Zimbabwe officially legalizes the use of foreign currencies, and the Zimbabwean dollar is pretty much abandoned by everyone.
In 2014, the Zimbabwean government releases bond coins, which are pegged to the USD, which is now the de-facto currency of the country.
In June 2015, the Zimbabwean dollar is de-monetized (removed from circulation and no longer deemed legal tender), and is exchanged for USD at an exchange rate of 35 quadrillion to 1.
In 2018, the government follows up their bond coins with bond notes. Despite the supposed pegging of these, they trade for around 3:1 or 4:1 against actual USD.
In February 2019, the government launches a new currency called the RTGS dollar, made up of account balances, and the previously issued bond coins and notes.
Last week, they officially declare the RTGS dollar the only legal tender in the country, and outlaw all foreign currencies, including the US dollar, which is what almost every shop and service is currently using.
RTGS is already seeing high inflation rates, and is currently trading at around 11:1 against USD.

Here's another very good article about the situation: https://mg.co.za/article/2019-06-24-why-no-ones-buying-the-new-zimbabwean-dollar

Wait for real? I had no clue about this currency change of Zimbabwe up until now, and seems like Zimbabwe are only fucking up their economy more by the day.

I read this article by bloomberg, and the country is soo fucked, they are lacking passports, and almost everything else a country could possibly need to survive. Then I stumbled upon another article where they plan on initially printing 400 million$, but that's not gonna help them if their policies and everything else that destroyed their economy still remain the same. That's only putting more fuel to fire, aka more inflation, more people getting involved in black market trades, and for what we could tell, a massive economic downfall that could impact more than what we will ever foresee.

While some smart people would be wise to get into the Zimbabwean bitcoin market by buying it from the cheaper markets from the ROW and sell at a premium in their local country if its any at all possible, the most of them won't, mainly because there isn't enough money whatsoever in the hands of the citizens.

Fair point. It's like trying to grow the same tree on the same soil in which other similar trees died. It simply wouldn't work out.


Which puts trust as a huge factor in making things work for the government. That's why most systems that require trust will always have a weakness. If one party does not trust the other enforcing the rules, resistance would be met and failure is always looming, just like RTGS currently.


Thanks for the read.

The currency per se is not the issue, and creating a new one doesn't solve any of the problems Zimbabwe is facing. The reasons behind the hyperinflation a decade ago are complex and multifactorial, but include a variety of issues which have not been addressed in any meaningful way since then - corruption, lack of confidence in the government, government sponsored violence, widespread unemployment and poverty, declining farming and manufacturing, etc. Simply launching a new currency in the same economic environment that destroyed the old one will obviously be met with the same results.

This article makes some interesting points: https://www.fin24.com/Economy/Africa/zims-dollar-returns-a-decade-after-it-became-worthless-20190624
If the people don't believe the currency is worth anything, then it will become worthless. Inflation is already at 100% for this newly launched currency. I don't think it will survive very long.

So in this case, we can somehow see that a complete revamp of a nation's currency does not save itself from yet another instance of massive devaluation and hyperinflation. It really needs to overhaul the government and its officials because they can't apparently control the situation, even with a new currency. I can see why the citizens can't trust the new currency, as it was met with legal issues and uncertainties even from the lawmen in the said country, and that's why bitcoin, together with USD is the most prized currency currently, even if it was banned by the government.

Partly, but that's not the full story.

Last week the Zimbabwean government banned all foreign currency, including the US dollar, and stated that the government's RTGS dollar is the only acceptable currency. This new currency, which was launched in February after the old Zimbabwe dollar was demonetized back in 2009, is already starting to see the same rampant inflation which crashed the old currency. People don't like being paid in it because it rapidly devalues, and the price of goods and services in RTGS dollars is rapidly increasing. Because of all this, US dollars are now both illegal, but also much more stable and more in demand than their own currency, and so attract a premium price on black markets.

The hard inflation of the local currency which isn't valued anymore seems to cause a drastic increase in the demand for the usage of bitcoin within the country for various needs. This looks to be the prime reason for such a drastic growth in price on localbitcoins trading platform.

Over the year such a scenario took place with India, and the difference wasn't this high. By that time the difference between India and rest of the world was around $2500. The reason behind such a difference was termed to be the demonetization of the Indian currencies.

What are the reasons for this price difference?