Think Bitcoin's Getting Expensive? Try Zimbabwe
It's super volatile, fueled by speculation, and almost completely unregulated. Yet bitcoin is still seen as better than hard cash for some desperate people in Zimbabwe. People there are piling into the cryptocurrency as a safer haven for their money, as local inflation soars and cash runs short.
One local bitcoin service, Golix, telling Reuters it saw the bitcoin exchange rate to U.S. dollars hit a record of almost 14,000 in the last week; 40 times what it was back in January. That's also almost double the average global rate, which hit its own record this month.
Consumer price increases estimated at up to 50 percent per month are one big driver. Bitcoin's other appeal in Zimbabwe is that it makes online shopping easier. Local banks have actually been blocking or capping some payments from consumers to companies outside Zimbabwe.
That's because the lenders themselves are running short of cash. In other words: People's money is sitting in the bank but they can't use it.
And hyperinflation means the money is decreasing in value while it sits there. Zimbabwe adopted the U.S. dollar, British pound, and South African rand as its official currencies back in 2009 during another economic crisis.
But the dollar is now worth less than 20 percent of its face value in Zimbabwe by some measures. Leaving bitcoin as a possible salvation for its fans.