Bitcoin could change Zimbabwe’s future
The small steps to resilience
“Scalability is the essential property of money. It is the ability of an item to be sold easily on the market, without significant loss in value.” – Saifedean Ammous
Scalability over time and how to deal with volatility.
Zimbabwe experienced an estimated 79.6 billion per cent inflation month-on-month, 89.7 trillion per cent year-on-year in mid-November 2008. Zimbabwe again has the highest annual measured inflation rate in the world. It lacks a currency that is scalable over time.
Bitcoin’s average unrealized return on capital gains is 200% annually. No person who has sold bitcoin after holding it for a period longer than five years has ever lost money. Bitcoin is a deflationary currency, a currency whose purchasing power increases over time – it is therefore a perfect method of storing its wealth.
However, it is still subject to volatility. As of today, we have experienced a loss of 70% in market value compared to all-time highs. Bitcoin’s price volatility is always an issue that is raised, when asked, “how will Bitcoin become a medium of exchange?” This is often the first point of contention, although many today mention that volatility is expected for any new asset that is still within its “price discovery” year, and that volatility will be determined as adoption increases.
Bitcoin is a distributed software that operates based on members of peer-to-peer networks who are all equal. This software allows you to operate a payment network between these peers, and that payment network has its own currency.
It allows cash withdrawal; the moment when funds, transferred from one party to another, officially become the legal property of the receiving party.
Bitcoin offers final cash in 10 minutes, and Bitcoin Layer 2 protocols offer final cash in less than one second.
Scalability through space and how to trade on both layers of Bitcoin.
Over the past decade, Zimbabwe has lost more than 100 relationships in our correspondent banking relationship network, due to sanctions. This greatly limits the ability to make payments to any country due to the fact that our local bank no longer has relations with banks outside to clear the payment, and prevents citizens from being able to buy and sell goods across national borders.
In addition, our legal tender currency, RTG, is a pseudo-currency, which means that it is not a currency offered in any other country, and that it can only be traded locally. We lack an economic system and currency that is scalable geographically.
Bitcoin offers the transfer of value to anyone on earth, without anyone’s permission. The cost of making transactions on an FCA bank account in Zimbabwe at the point of withdrawal has a minimum of 2% and can go as high as 15% – while the cost of trading on Bitcoin (using Layer 2 protocols) is less than 0, 1%, to complete a transfer.
Bitcoin has the potential to gain massive market share for foreign money transfers and local settlements. But only on the condition, I think, that we extract bitcoin locally. Miners can sell bitcoin at a 1: 1 rate or 2% cost, when they need fiat currency to pay expenses. But the biggest advantage miners provide is that individuals no longer have to send fiat currency outside at a 5-15% cost to buy bitcoin and resell at a higher premium.
EcoCash’s new foreign exchange wallet, combined with a Telegram bitcoin bot, can offer a solution to Zimbabweans’ inability to ramp up and down the Bitcoin network.
The telegram exchange, which is custody, allows individuals to buy and sell bitcoin to anyone around the world and receive funds through the currency wallet and other fiat currency banks.
Zimbabweans can easily buy bitcoin using Telegram’s network without having to use a bitcoin exchange.
I prefer social media platforms, rather than new Bitcoin applications, because so many currency transactions have already been done on social media (mainly WhatsApp). WhatsApp has a very strong network established locally, and Telegram is slowly developing one.
Scalability
Sanctions also created a third problem – the storage of foreigners’ foreign exchange reserves, which often results in higher inflation. But even this introduces the annoying problem of never having small denominations to buy goods and services. We are missing a currency that is scalable, period.
“It must be borne in mind that there is nothing more difficult to accomplish, nor more doubtful of success, or more dangerous to deal with, than to set in motion a new order of things.” -Niccolo Machiavelli, 1469-1527
Zimbabwe is in a unique position. Our primitive fiat financial system is failing repeatedly and consistently, we are suffering from two decades of sanctions and our government regarded bitcoin as an illegal currency, preventing stock exchanges from functioning. Conditions such as these have destroyed countless once prosperous industries in our country; industries that simply left and flourished in other regions of the globe, denying us citizens the opportunity to create wealth and achieve a higher standard of living.
Zimbabwe Bitcoin Community on WhatsApp
P2P Zimbabwe Telegram Bitcoin Exchange Bot
This is a guest post by Alexandria. Expressed opinions are entirely their own and do not necessarily reflect the opinions of BTC Inc Bitcoin Magazine.
