Bitcoin is extremely rare in Zimbabwe after the government banned it last year, with the sole crypto exchange in the country, Golix, closing in May 2018.
They had 49,333 Zimbabwean customers prior to being shut down, with it now very difficult to buy bitcoin in the country.
The only way appears to be peer to peer, but unless you’re buying from abroad, the asking price is $50,000.
EcoCash describes itself as Zimbabwe’s Mobile Money Solution. Meaning these are local offers.
One person claims to offer bitcoin for global prices, but he has has only one trade and has been blocked presumably by the buyer, so this offer does not appear credible and it’s a small amount in any event of just $55.
With Western Union or any other international payment method, like PayPal, there are numerous offers at global prices.
To buy bitcoin locally, however, the lowest credible asking price is a cool $50,000, with some wanting nearly $100,000.
We do not know if there has been any trade at these prices, with currently no buy offers with EcoCash in Zimbabwe.
A few of those who have made these offers appear to be experienced traders with some seemingly traveling to and from South Africa, hence presumably they’re gettin some business since they keep putting up the offers.
Africa Going Bitcoin?
Luno, a crypto exchange in South Africa is currently showing a premium of about $1,000 for bitcoin on considerable trading volumes.
The global price at the time of the above screenshot was $12,070. There’s a premium, therefore, in Nigeria too with the Euro at a discount, but at very low volumes.
The premium is there because they have instituted capital controls, with everyone prohibited to move money in and out without authorization.
It is unclear why they have implemented such prohibition, with the economy growing a bit at 1%, but in real terms falling due to the 4.5% inflation probably in part due to the much higher interest rates of 6.75%.
This restriction means supply and demand in South Africa can not easily be submerged into global supply and demand, something that may well explain why their economy is not doing that well.
This artificial slight isolation tells us there is more demand for bitcoin in South Africa than globally, but where is this demand coming from?
Financial Chaos in Zimbabwe
Once known as the Jewel of Africa, Zimbabwe is on its knees with whole communities living on less than 35 cent a day.
Following some respite from hyperinflation that was controlled by getting rid of their national money alltogether, inflation is now back with a vengeance.
Inflation begun going out of control in October and the reason appears to be because there’s just not enough money in the country, so prices have skyrocketed.
Their economy was running on dollars, pounds, euros, rands, and any other foreign money, but as they kept exporting more than importing, more money was going out of the country than coming in, leading to a shortage.
The government there has declared they are to return back the Zimbabwe dollar in a move that some call a gamble:
According to the BBC, “Zimbabwe has become a cashless society, relying on card-based transactions or trading with mobile money.”
Hence the bitcoin trader above was happy to sell bitcoin at global prices for cash through Western Union because cash is rare in Zimbabwe.
Meaning they do not trust this digital fiat money presumably because the government can easily confiscated it. Hence traders want an astonishing premium to exchange bitcoin through EcoCash payments.
Which is presumably where South Africa comes in. They’re neighbors, so Zimbabweans go to South Africa to buy goods and sell them in Zimbabwe or vice versa.
Presumably some go there to buy bitcoin, hence the extra demand, although bitcoin awareness and adoption has been growing in South Africa itself.