Economist suggests Bitcoin for Zimbabwe
- Published on 14 November 2016
Bitcoin could be the solution for Zimbabwe's currency woes suggests economist Philip Haslam, co-author of When Money Destroys Nations, a book about regular people in Zimbabwe who lived through hyperinflation.
Though his assertion is not new, it is one of the first to come from someone who has researched the consequences of money printing as an aspect of the country's hyperinflation.
'If Zimbabwe establishes a privatised bitcoin national currency, if the market naturally went to a Bitcoin type currency, as other currencies around the world indicate weakness with money printing happening, you'd have a whole lot of currency flowing into Zimbabwe," Haslam says in a piece by an Institute of Security Studies ISS Consultant, Simon Allison. "Zimbabwe would transform from a basket case to a global banking centre in a stable cryptocurrency. And that would be fairly quick."
Haslam argues that the rand could only bring some immediate advantages to Zimbabwe, including the virtual elimination of currency fluctuations for cross-border trade. But with Bitcoin as a stable currency alternative, there won't be the problem of the currency eroding and perishing as it is with notes.
Haslam believes the Bitcoin system allows for privatised banking and it is both a currency and international payments platform.
A forecast by a London School of Economics author Garrick Hileman in 2014 positioned Nigeria and Zimbabwe among top 10 of 178 countries with the highest relative potential for Bitcoin adoption.
In May 2016 Hileman spoke to ITWeb Africa and said that assuming the same ranking criteria, the picture for the vast majority of countries is likely to be largely similar to what it was two years ago on the Bitcoin Market Potential Index (BMPI), with a few exceptions.
The Index used 40 variables related to Bitcoin's core functions - store of value, medium of exchange, and technology platform – to group the index's seven sub-indices namely technology penetration, international remittances, inflation, size of informal economy, financial repression, historical financial crises, and Bitcoin penetration.
However, while new Bitcoin-related initiatives have recently emerged in parts of Zimbabwe with operators such as BitMari, BitFinance and Bitrefill offering cross-border payment, exchange and call credit refill services, the local financial services regulator the Reserve Bank of Zimbabwe (RBZ) has not changed its stance that Bitcoin is a risky venture for its users in the country.
The central bank hinged its position on its lack of a regulation for cryptocurrencies.
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