Zimbabwe's Economy: A Gold Coin Solution?
Like that of most nations, Zimbabwe's economy is a mess. Therefore, a gold coin the solution? It could be. Its central bank declared that
Zimbabwe's economy is in bad shape, like most of the world's. Is a gold coin the solution? It just might be. The country's central bank announced “the "Mosi-oa-tunya" coin, named after Victoria Falls." It’s Zimbabwe’s response to a dire situation. Reuters says that “annual inflation, which hit almost 192% in June, cast a shadow over President Emmerson Mnangagwa’s bid to revitalize the economy."
The government of Zimbabwe created a hedge against inflation and a highly-demanded product to solve their own problem. A solution, yes, but still. The "Mosi-oa-tunya" coin might just work. In the article, it says that the gold coin will contain one troy ounce of gold and be sold by Fidelity Gold Refinery, Aurex and local banks," the article detailed.
A gold coin is not a bitcoin, but it offers a solution for people who are analog. At the moment, the technology needed to use bitcoin isn't accessible to everyone. Everyone needs a hedge against inflation, and if it's easy to get to that's even better.
“The central bank governor John Mangudya said in a statement on Monday that the coins will be available for sale from July 25 in local currency, U.S. dollars and other foreign currencies at a price based on the prevailing international price of gold and the cost of production.”
That said, what happens when the U.S. is no longer a superpower?
Why Don’t You Use Bitcoin, Zimbabwe?
In early 2018, there were rumors that Zimbabwe could be the second country to accept bitcoin as a legal tender. This was a big step considering that Zimbabwe had banned all types of cryptocurrencies "to safeguard the public" only four years ago. At the same time, a new Finance Minister formed a governmental cryptocurrency unit to study this subject.
Africa is primed for crypto adoption. 10-20% banked. Need financial access and inclusion. Blockchain provides that with a smart phone.
— CZ 🔶 Binance (@cz_binance) July 6, 2022
NewsBTC quickly covered the news that bitcoin was considered legal tender:
“Now that many citizens are demanding crypto, the government is considering the option seriously. They disclosed this information through one of their local news outlets. The news also disclosed that the country is already discussing using Bitcoin as a legal tender – the Perm Sec Brig. Colonel Charles Wekwete confirmed this information. He also declared that the blockchain offers both positives and negatives.”
The Reuters article was correct in predicting that Zimbabwe would not be ready for hyperbitcoinization, but it buried the real story.
Why is the US dollar considered a legal tender?
Let's not waste time. The gold coins are cool, but the five-year dollar run is the real deal.
“Last week, Zimbabwe more than doubled its policy rate to 200% from 80% and outlined plans to make the U.S. dollar legal tender for the next five years to boost confidence.”
Reuters provides a quick summary of Zimbabwe’s economic history for those who need it:
“Zimbabwe abandoned its inflation-ravaged dollar in 2009, opting instead to use foreign currencies, mostly the U.S. dollar. The government reintroduced the local currency in 2019, but it has rapidly lost value again.”
So, the country is no stranger to the U.S. dollar and it's about to lose its local currency again. A country without a local currency, like El Salvador or Central African Republic. That makes Zimbabwe a prime candidate for bitcoin adoption in the future. There's no rush. It's not clear if this was in reaction to the "Mosi-oa-tunya" coin news, but Binance’s CEO CZ recently tweeted, “Africa is primed for crypto adoption, 10-20% banked! Need financial access and inclusion; blockchain provides that with a smart phone."