As the old saying goes, “necessity is the mother of invention”, and the instability of the Zimbabwean economy undoubtedly offers several opportunities for innovation.
It wasn’t that long ago that devastating hyperinflation battered the Zimbabwe dollar. From 2003-2009 a series of land reforms and currency devaluations turned Zimbabweans into poor trillionaires. Inflation peaked in 2008, estimated at 79,600,000,000% per month. At that point, paper currency became all but worthless. Three eggs at a market might sell for 100 billion Zimbabwe dollars. Four failed devaluations later the government officially abandoned the Zimbabwe dollar in spring 2009 – just months after the first BTC ledger was recorded.
Zimbabweans made do with US currency and the neighboring South African Rand. Most transactions stayed off the books in a shadow economy that has come to dominate the markets. In a recent IMF study, it was estimated that about 90% of Zimbabweans work in the informal economy, which is driven by cash. However, this reliance on cash has meant that people have been locked out from accessing traditional banking services.
Zimbabwe’s largest wireless network offers a mobile payment solution, Ecocash, that has become a lifeline for people historically excluded from traditional banking services. Through their mobile phones, Zimbabweans can now pay tolls, pay employees’ salaries, receive their own salaries, and pay shopping bills. Meanwhile, the lack of trust in the government-issued bond notes pegged to the US dollar means that they are frequently rejected by citizens, and often shopkeepers are still obliged to make change with cigarettes and gum due to a lack of coins.
Ecocash is by no means an ultimate solution. The system is centralized and has particularly high fees for transfers beyond Zimbabwe, limiting the vital flow of remittances from the Zimbabwe diaspora. In fact, at the time of writing Ecocash has been down for the last several days, bringing much of Zimbabwe’s economy to a halt.
And thus the stage is set for cryptocurrency innovators to make a tangible difference in a struggling economy. Despite a series of flip-flopping court rulings, Golix, the country’s largest crypto exchange, continues to deal in Bitcoin, DASH, and Bitcoin Cash.
And now Kuvacash, a new crypto payments platform is offering its services through the DASH blockchain. DASH can process a payment in milliseconds at a minimal price, and anyone with a mobile number can use the Kuvacash system. The Reserve Bank of Zimbabwe has approved the project, and a team of dedicated entrepreneurs seek to bring the crypto revolution to a market that can use it the most. When your country’s currency no longer has any value, just create your own.
About the author: Benjamin Glauber is a Platinum Account Manager at eToro and working closely with eToro’s Senior Market Analyst, Mati Greenspan