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It’s time to Join the Bitcoin Network!

Piggy has been hearing some disturbing news in the market that Zimbabwe is looking to come up with a new currency by the end of the year. Of course, there are questions on whether the country is ready for its own currency given the macro-economic constraints such as inflation, budget deficit, limited foreign direct investment and a trade deficit. The fact is that just like shares, currencies depend on confidence in underlying fundamentals. Piggy has been assessing the level of confidence in Zimbabwe by observing the movements in the value of the RTGS dollar, which is effectively a de facto local currency. On the parallel or shadow market, the rate has moved for around 3.5 against the USD to at high as 8.8 in just a few months.

This shows that it will be a pre-mature move for monetary authorities in Zimbabwe to introduce a new currency. However, Piggy’s concern is on how economic agents will perceive the RTGS dollar going forward. This is because such news flow tends to cause a stir in the markets and a drastic loss of confidence in the RTGS dollar and there will be stampede for the USD in the market. The result will be a further depreciation of the RTGS dollar. Piggy has consistently recommended individuals, households and institutions to park RTGS balances in inflation and currency hedging assets such as stocks. For individuals, the C-Trade is the perfect platform. There is also an opportunity to take things further by trading FX using the IronFX platform.That said, there has been a lot of debate on the best option for Zimbabwe with some suggesting joining the Rand Monetary Area. In fact, ideas that have been thrown around include the use of crypto-currencies.  A cryptocurrency is a digital currency that facilitates both a secure, decentralized payment system and a tool for the storage, verification and auditing of information, including digital representations of value. The most popular of course being Bitcoin which has been devised for anonymous payments made entirely independently of governments and banks.

The Bitcoin network is growing rapidly…

The advantages over traditional payment methods are lower costs and speed. There are no bank holidays, no borders and no imposed limits when it comes to Bitcoin. It is possible to send and receive any amount of money instantly anywhere in the world at any time. The following are the reasons why Bitcoin can work in Zimbabwe;

  • Zimbabwe cannot “bring back” its Lecturers, Engineers, Medical Practitioners (Doctors and Nurses), Bankers and Accountants from the USA, UK, Australia, South Africa, Namibia and Tanzania at this stage but can make it easier for them to send money home. Most of these professionals are being paid sufficiently well to make family remittances from overseas. Bitcoin can facilitate much faster and cheaper flows of value;
  • A large share of the diaspora community is educated enough to easily adopt Bitcoin. There are also a number of reputable Bitcoin exchanges or wallet companies in UK and South Africa such as Luno that facilitate Bitcoin and Ethereum (another digital currency) payments; and
  • Bitcoin can provide electronic payment services for users who lack access to traditional financial services in remote parts of Zimbabwe. The good news is that some non-governmental organizations (NGOs) and impact investors have already adopted Bitcoin as a payment system.

Open a Bitcoin Wallet today with Luno using the link (Promo Code P86Y5)

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