Hyperbitcoinization? Bitcoin Trades At 85% Premium In Zimbabwe - Priced At $7,200

While bond notes were put forward as a panacea to diminish the flight of wealth from Zimbabwe... (as Steve Hanke noted, it was not)...

The most recent attempt by the government to increase liquidity (the money supply, measured broadly) was the introduction of bond notes in November 2016. Incidentally, in conversations I had with Dr. Kupukile Mlambo, Deputy Governor of the RBZ, in May of 2016, I strongly opposed the introduction of bond notes, indicating that they were inconsistent with orthodox dollarization and would result in a complete disaster.

 

Although bond coins existed on a small scale since December 2014, the introduction of bond notes was significant. These notes were “backed” by a $200m facility from the African Import Export Bank (Afreximbank) -- a bank that some allege is unusually close to the Zimbabwean government. Among other things, it has still failed to publish official documents regarding the bond note facility. The uncertainty surrounding these bond notes has resulted in a black market for dollars, where the bond notes normally trade at discounts ranging from 5-15%. Not surprisingly, banks have attempted to remove these notes from their books, with bank officials reportedly engaging in black market deals for large cash sums at over 20% discounts!

 

 

As for what the bonds might eventually be worth, it is prudent to assume that they will be defaulted on. In that case, and taking other African sovereign defaults as a guide, one is left to conclude that the bonds in default would fetch 5-18¢ on the dollar. So, bond notes, which are products of Zimbabwe’s monetary mischief, are in a death spiral that will witness further significant declines in value. In that event, discounts on other elements of the New ZimDollar would also realize massive discounts. The NZD would become worthless, and with that, inflation would raise its ugly head. 

 

Zimbabwe has once again engaged in a fraud on the public, creating a monetary mess and hardship.

We noted in June that the cash crisis continued unabated.

Those awaiting cash transfers at a bank may wait a month to be cleared and, even then, the transfer may be refused.

The Standard, Zimbabwe’s leading Sunday newspaper, ran an article at the time entitled, “Black market thrives, as banks run dry.”

Some highlights from that article:

HARARE’S Road Port has become the unofficial bank of last resort, never short of cash, no queues and a multicurrency platform. The money market at this busy bus terminus now plays the role that the formal banking sector has failed. It is effectively making a mockery of the Reserve Bank of Zimbabwe (RBZ).

This points to the nature of black markets. They thrive based upon fulfilling an existing need, not upon government control. They therefore replace whatever services the official market fails to provide.

“Top government officials, supermarket owners and service stations were behind the thriving black market, which is never short of cash.”

And now it appears many Zimbabweans have found an alternate way to store/transfer wealth away from Mugabe's prying (and confiscatory) eyes.

As CoinTelegraph reports, as the country appears to be headed toward another bout of hyperinflation,citizens are turning to dollars and Bitcoin.

The use of Bitcoin in Zimbabwe has grown exponentially as the government has begun to stop all credit card payments and has restricted the flow of cash into and out of the country.

 

People wishing to make payments for vehicles have been forced to use Bitcoin and car lenders are happy to accept.

 

In all the chaos, the price of Bitcoin on the local exchange, BitcoinFundi, has soared to $7,200.

 

This premium reflects a frantic desire to find ways to transact within an economy where government controls have made traditional means impossible.

image courtesy of CoinTelegraph

As TechZim reports, as ‘hard currency’ disappears from the street, the demand for alternative payment options such as bitcoin will but increase, resulting in the rate increasing further.

Those that are using BTC as a means of sending money back to Zimbabwe will be excited with this rate, not only smiling all the way to the bank but back from it too...

Comments

IH8OBAMA VD Wed, 09/27/2017 - 15:31 Permalink

This development isn't about bitcoin.  It's about Zimbabwe and their lack of intelligence.  These niggars are so stupid they couldn't learn from the last time the currency cratored.  How stupid are these people?What's that word that another ZHer invented earlier.  Oh yeah, Zimbabwe needs to learn how to get COONTROL of their monetary system.

In reply to by VD

Implied Violins illuminatus Wed, 09/27/2017 - 16:15 Permalink

It will happen to ALL cryptocurrencies. The death-knell will be quantum computers.

I just saw this post:

Here's an article exploring the quantum effect on cryptocurrencies:
https://medium.com/the-quantum-resistant-ledger/be-prepared-for-quantum…

Quote:

Some computer scientists say quantum computers are moving closer to reality and will cripple bitcoin’s encryption systems and doom bitcoin. Governments are investing aggressively in quantum computers, which are ultra powerful.

Quantum computers, first theorized by physicist Richard Feynman in 1982, have promised a new era of computing. The theory has only recently translated into significant real-world advances, with NASA, the CIA and Google working on a quantum computer. Computer scientists now warn the machines will cripple existing encryption methods and destroy bitcoin’s technological foundations.

Andersen Cheng, co-founder of Post Quantum, a U.K. cybersecurity firm, told Newsweek that bitcoin will end the day the first quantum computer arrives. He said the quantum computer will undermine the cryptography surrounding bitcoin’s public and private keys.

Bitcoin recipients share their public key with the sender. To spend bitcoin, a bitcoin owner must use their private key. If another party learns the private key, that party can spend all the bitcoin.
Martin Tomlinson, a professor at the Security, Communications and Networking Research Centre in Plymouth University, said a quantum computer can calculate the private key from the public one in a minute or two. By learning all the private keys, someone would have access to all available bitcoin. Tomlinson did not know when the first quantum computer will appear that will have this capability, but he noted that extensive research is under way. The European Commission announced a $1.1 billion project earlier this ear aimed at bringing a “quantum revolution.”

It seems like you could have a quantum-safe cryptography, but it would require consensus from all the bitcoin users to change the underlying encryption method and algorithm, which apparently can't happen without major disruption to the current system.

Here is some recent progress on quantum computing, suggesting that we are pretty close to having a device in the next few years that may cause the aforementioned ruckus:

Google to prove quantum supremacy this year by demonstrating a 49-qubit quantum computer that can out-compute any current classical computer:
https://www.sciencealert.com/google-s-quantum-announcement-overshadowed…

IBM used a quantum computer to simulate a chemical reaction:
https://futurism.com/ibm-just-broke-the-record-of-simulating-chemistry-…

Microsoft is developing a topological qubit and a programming language for their quantum computers:
https://www.engadget.com/2017/09/26/microsoft-new-coding-language-is-ma…

University of Tokyo theorizes of a new method to create quantum computers:
https://futurism.com/researchers-claim-they-just-invented-the-ultimate-…

Some challenges and uncertainty:
https://singularityhub.com/2017/09/26/what-it-will-take-for-quantum-com…

My take on all of this is that if this shit is in the news, then (((they))) probably already have it.

I'm sticking with gold and silver.

In reply to by illuminatus

Deep In Vocal … Wed, 09/27/2017 - 14:00 Permalink

Another population stuck in the matrix.. enjoy that government cock up your ass for the rest of your lives.... every payment dumb human....every single payment....sauron is watching..... smile to the camera....filthy fucking human...........ha ha ha.............................stuck in the matrix

tmosley malek Wed, 09/27/2017 - 14:09 Permalink

How is that a boast? Had nothing to do with me.I thought it was a fairly kind comment myself. Certainly compared to the other replies.But then, you are caught in a similar mental trap, and don't have the training to extract yourself, so you will remain hostile to both me and crypto until the day you die.Sad, really.

In reply to by malek

malek tmosley Wed, 09/27/2017 - 14:56 Permalink

Oh, all of them which you cannot deduct rationally.
For starters:
- gold is the time-tested most widely accepted collateral, therefore most likely to retain value, therefore best store of value (look, I tried my best to deduct this one rationally!)
- all fiat eventually return to their intrinsic value (even if they are "blockchain-secured")
- don't invest in what you don't understand
- gambling/martingale schemes are not investing
- bullshitting is no way to go through life

In reply to by tmosley

tmosley malek Wed, 09/27/2017 - 15:12 Permalink

>gold is the time-testedYes.>most widely accepted collateralNo. That would be dollars.>Therefore likely to retain valueSure.>Therefore the best store of valueShort term gold is controlled, and has utterly failed to beat inflation. You simply CAN NOT BUY what you could buy just a few years ago. Medium term, maybe. Long term, the slugs of gold start raining from asteroid mining to add to the glut caused by nearly free energy from fusion and thorium fission feeding into mining>look, I tried my best to deduct this one rationallyYou don't know what rationality is. You haven't had nearly enough time to read through the sequences. Start now and come back in a month and you can start making such claims. What you have is a platonic chain of logic, where a failure at any point in your reasoning fouls up your conclusion.>all fiat eventually return to their intrinsic value (even if they are "blockchain-secured")Blockchain isn't fiat currency, as much as you wish to paint it with that brush. Fiat currency costs very little to create while being worth far more than that cost, IE it costs 4 cents to print a 100 dollar bill, and creating a trillion dollars with a keystroke is free. The thing keeping those two prices from converging is the government monopoly of issuance. Anyone can mine a bitcoin, just like anyone can mine gold. They can be highly efficient and make money doing so, or they can be inefficient and lose money.>don't invest in what you don't understandAgreed. But don't refrain from attempting to understand something because you don't understand it, and certainly don't refrain from such investigation because you don't WANT to understand it because you have already come to a conclusion without knowing the facts.>gambling/martingale schemes are not investingEverything is gambling. You are betting your life you won't die in a car crash when you go to the grocery store. You are betting your house won't collapse when you go to sleep.>bullshitting is no way to go through lifeLots of people would disagree with you. I am agnostic on the subject, and tend not to rely on such means, and stay away from those who do.

In reply to by malek

malek tmosley Wed, 09/27/2017 - 15:29 Permalink

fiat "Dollars" as COLLATERAL - now your genius really shines.
You may want to revisit the concept of collateral before putting foot in mouth.

"Blockchain isn't fiat currency"
Your reading comprehension is lacking - I talked about blockchain-secured fiat (as blockchain is basically an accounting tool)

"Everything is gambling."
The good ol' realitivist/nihilist canary.
And maybe the laws of physics change tomorrow! So then based on what are you even making arguments here??

But it seems you're missing another of history's lesson (I really was considering to add this before!):
- there are no guarantees in life (not even by a blockchain)

In reply to by tmosley

tmosley malek Wed, 09/27/2017 - 15:35 Permalink

>You may want to revisit the concept of collateral before putting foot in mouth.That isn't an argument.>I talked about blockchain-secured fiatYou failed to make that clear.>The good ol' realitivist/nihilist canary.That isn't an argument either.>And maybe the laws of physics change tomorrowI don't know what you are trying to say here other than "tmosley bad, malek GOOD!">there are no guarantees in life (not even by a blockchain)So?

In reply to by malek

holgerdanske Wed, 09/27/2017 - 14:01 Permalink

And the idiot running the country, has just bought two Rolls Royces in South Africa. The cost? R 8 million each!That is about 1.2 million US$.Small change if you can murder and rape the country at will.

Deep In Vocal … Wed, 09/27/2017 - 14:01 Permalink

i got a bitcoin for you human....... solitary confinement....check back in a couple of years and all that's left of you is a rotten corpse........................ disugsting fucking human.....sick and tired of your fucking spinesless cowards.....enjoy that government cock up your ass you fucking cretin.................the robots will stomp you the fuck out in the future..........AI laughing at you...........I'm laughing at you.............