Zimbabwe’s currency, the Zimbabwean dollar, is undergoing super-hyperinflation. It is not on its last legs, its kaput, its collapsed, its down and out. Zimbabweans will have to exchange quadrillions of local dollars to gain a few US dollars next week.
What would you do? There are various options that Zimbabwe might go in. Create a new fiat currency
- Create a new fiat currency
- Adopt the US Dollar
- Adopt Bitcoin
- Create their own digital currency
If they create a new fiat currency then who in the global market would accept it? How long would it take to create, and get accepted into the global financial market? With the fear of how they destroyed their previous fiat currency so fresh in the thoughts of the market would they even be able to trade internationally?
Adopt the US dollar is an option. The world’s reserve currency, already accepted in most places. And currently it seems that this option is what their country is guiding itself towards. And how little US dollars will they receive?
Yahoo News reports it as;
The RBZ said customers who still have stashes of old Zimbabwean dollar notes can walk into any bank and get $1 for every 250 trillion they hold. That means a holder of a 100 trillion bank note will on Monday get 40 cents. The RBZ has set aside $20 million to pay Zimbabwean dollar currency holders.
Welcome back to the global international market Zimbabweans, with your few pitiful dollars.
I recently saw a Trews episode on Youtube. Russel Brand discussed how in the US a TV entertainment show had been created, for entertainment purposes. About giving money to poor people, so that they can feel what its like not to be desolate for once in their lives.
Something is very wrong in this world when things like this can happen.
They could adopt bitcoin. But at the current value of $232 (in-erringly stayed this way for the last two months), they would have very little for their entire populace. And would still be excluded from the global market through lack of purchasing power.
Could they mine bitcoin? Possibly, but at the current rate of hashpersec, what would they receive? Assuming they could even afford to buy mining hardware at this point. They could make their own, but this would take time, and would still have to compete against the massive power of the current Bitcoin network.
Maybe Startup 21 will come to the rescue. Do enough Zimbabweans have mobile phones that they would receive some Satoshi through mining? But how little Satoshi would they receive? Probably not enough to live on or trade internationally on any meaningful scale.
Create Their Own Digital Currency
With bitcoin acting as the world’s reserve for the Crypto-Age each nation needs its own national currency. It is fine how a country works taxation at the point of conversion to fiat at this time. But what of the time when the entire financial world operates based on cryptocurrencies?
And as much as I hate to say it, they will need a form of taxation for public expenditures, free health, free public services, and similar. Preferably a taxation service that takes from all the avoided tax in the world, from businesses and individuals alike.
Taking from the poorest is a pitiful amount vs. the amount you would take if you took from the richest. And a choice of where your taxes were spent would most definitely be preferred. But we live in the world that we live in, for now. Yes, I believe in a bit of taxation, call me a statist if you need. But I will not say no to free hospitals for poor and sick. Just compare the UK to the US, and how medical bills differ.
If the Zimbabweans created their own cryptocurrency, they could far easily integrate it into the global crypto-market. I expect that many exchanges international would be most interested to implement the world’s first national currency.
Zimbabweans can use the same hardware and facilities that could have used for bitcoin for their cryptocurrency. Float it on the open world market, pay their people in it. Zimbabwean miners could be earning a wage, a decentralised monetary issuance. And through their earnings employ others and expand the national growth.
An eventual finite system is immune to hyperinflation. It instead has a deflationary curve as its value increases over the open market as the supply declines.
Assuming it has government and population support, is there any reason it would not grow? In 2009, Zimbabwe had a mobile penetration rate of about 24%, in 2011 the mobile penetration rate was 64%. Two years ago in 2013 it was 105.5%.
However, in 2015 it seems to have dropped down to 87% penetration. Though this is based on the number of active sim cards in the country, so it has arguably dropped due to costs of keeping sims active due to hyperinflation.
The volatility you say? Any more or less than a newly created fiat currency entering the open market? And a fiat currency create after the collapse of the previous fiat currency is not very likely to gain in value.
Would you buy some of this new cryptocurrency? Invest in a nation, support them at the grass roots. All they would need is a mobile phone, and an internet connect.
Whereas a the world’s first national cryptocurrency would gain in value you question? Do you think there is much chance in that? I propose that there is.
Disclaimer: I am biased on the last topic because of a project I am assisting on.