A recent survey by The Zimbabwe Standard has shown that a number of banks in the central business district of the country’s capital, Harare, has long queues to withdraw cash with others running out of cash by midday.
This demand for cash is fuelled by a lack of trust in an impending introduction of bond notes by the apex Reserve Bank of Zimbabwe.
Although its governor John Mangudya says the bond notes would not happen within two months, the latest development better highlights the growing need for a cryptocurrency like Bitcoin as a dependable option for users.
Why Zimbabwe banks lack credibility
This lingering cash crisis and its attendant challenges have reportedly drawn the attention of illegal foreign exchange dealers into the country to do fast business. In other cases, some bank staff allegedly take the advantage to charge clients up to 10% ‘commission’ on electronic transfers to the accounts of money changers in return for hard cash.
The main contention surrounds whether money deposited in banks would have the same value it deserves once the financial institutions will start giving bond notes.
This skepticism hanging on investing in the bond notes had been worsened by a former finance minister’s claim that the government is trying to introduce bond notes with the aim of bringing back the rejected Zimbabwe dollar through the back door.
Tendai Biti said reintroducing the Zimdollar will be a disaster because it could be over-printed again leading to a broad money supply over the country’s GDP to make too much money chasing too few goods and ending up being dysfunctional.
When it was in use, the Zimbabwean dollar denominations rose to have a 100 trillion dollar bill becoming the note with the most zeroes of any legal tender in recorded history. The bills, which still auctions on eBay, circulated for a few months in 2009 when the country experienced one of the toughest hyperinflation in history with US$1 changing for trillions of Zimdollar.
The currency was eventually abandoned in favour of the South African rand, the US dollar and several other foreign currencies.
Would Bitcoin be a better option?
Whether Bitcoin would be a better option for the southern African state of Zimbabwe to adopt as an alternative method of payment or not has triggered an online discussion of late. The discussion is still ongoing and would possibly create greater awareness about the need to adopt Bitcoin for better safekeeping or for other profitable use.
A piece by L.S.M Kabweza suggested that reliance on Bitcoin helps with Zimbabwe’s trust problem. In a forum where there have been talks about making a hedge investment using Bitcoins, there were diverse views with suggestions of various forms of investments. However, the most prevalent consensus in view comes with buying Bitcoins itself as a safe investment.
Users vs. banks - who should control the money?
Going back a month earlier, the Editorial Director at The South African Investor tried to answer the question: ‘Should you be investing in Bitcoin?’
Aiden Sookdin writes:
“Bitcoin operates in the digital world. Because of this, you, the user, have more control over your money. This is the first time ever, that the user controls the financial system. That in itself is a huge deal. It gives you the opportunity to drive a change in our social fabric.”
Gil Luria of Wedbush Securities who covers e-commerce and payments also says that Bitcoin has taken on a similar role to gold, hence could appeal to a coinciding demographic of investors “since both may be used as an alternative when investors lose faith in traditional asset classes".