Zimbabwe's cryptocurrency market is surging. On the very day Robert Mugabe resigned after 37 years in power, bitcoin's price on the country's main exchange, Golix, had reached $13,000—50 percent above
Zimbabwe's cryptocurrency market is surging. On the very day Robert Mugabe resigned after 37 years in power, bitcoin's price on the country's main exchange, Golix, had reached $13,000—50 percent above the global price of $8,000. The surge reflects the nation's desperation.
Decades of Mugabe's rule devastated Zimbabwe's economy. Hyperinflation peaked at 500 billion percent. The currency collapsed. In 2009, the government tried bond notes pegged 1:1 to the dollar, but citizens rejected them. Zimbabweans have lost wealth in the process—they are 15 percent poorer than in 1980.
Now, with Mugabe out and the economy still in crisis, residents are searching for ways to preserve their savings.
Dash, a cryptocurrency built for transactions, wants to help. The project is funding KuvaCash, a peer-to-peer localized cryptocurrency payment service launching in Q2 2018. It will be the first of its kind in Zimbabwe. A free mobile app will let Zimbabweans trade, exchange to and from USD, make mobile payments, and top up their accounts with minimal fees. Agents running physical kiosks will manage the on-the-ground operations.
Andreiko Kerdemelidis, KuvaCash's finance and technology director, described the current landscape: "The informal economy has US dollars in circulation, but they are no longer being managed by banks and are physically quite dirty. People are scrubbing bills and hanging them up on clotheslines to dry, selling the cleaner bills at a 10-20 percent markup."
He continued: "The bonds the Zimbabwean government introduced in 2009 (pegged against the USD at a 1:1 exchange rate) are a stopgap measure. We don't know what the long-term plan is for these notes but it is fair to say that Zimbabweans currently prefer USD bills to extant mobile-phone based payment solutions or bond notes."
KuvaCash aims to fill that gap. The platform will introduce Dash to the nation and offer Dash-based services in response to the cash crisis and the hunger for alternative ways to store and move value. "KuvaCash will give locals an ideal alternative to improve their ability to do business and buy everyday goods and services without hassle, overpaying on fees, and using secondary markets," Kerdemelidis said.
The project is pursuing a money exchange and remittance license and expects backing from Zimbabwe's government and central bank. If the Zimbabwe test succeeds, Dash Core CEO Ryan Taylor said the model could expand to other countries facing hyperinflation and economic chaos.
