zimbabwe bitcoin

The bitcoin price is approaching $14,000 in Zimbabwe as locals have turned to the most prominent cryptocurrency as a vehicle to escape the country’s dire economic and monetary situation.

The bitcoin price has soared to record levels in recent weeks and has positioned itself to surpass even the most bullish year-end price targets. This is especially true following the suspension of SegWit2x, the controversial hard fork that seemed likely to initiate a blockchain and community split.

As phenomenal as this growth has been, however, it pales in comparison to the bitcoin price surge that can currently be observed on bitcoin exchanges in emerging markets like Zimbabwe.

A decade ago, Zimbabwe became infamous for what may be the most extreme case of hyperinflation in modern history. The situation became so dire that the country’s central bank began printing hundred trillion dollar notes. Eventually, the fragile monetary system collapsed, and the country adopted the U.S. dollar as its official currency.

bitcoin price
Source: Drew Stephens / Flickr

However, the country has struggled to acquire and maintain enough physical dollars to meet demand, so the government has compensated by printing bond notes that are supposedly backed by USD at a one-to-one ratio.

But due to the bank’s dismal history of monetary policy, the bond notes trade at far lower than their stated value. Moreover, foreigners do not accept them, so all imports must be paid for with USD or other trusted currencies. This steady outflow of dollars has worsened the situation, leading the government to implement strict currency controls that have more or less failed to produce the desired effect.

Because of the cash shortage, banks have placed extremely low daily withdrawal limits — often $50 or less — and Zimbabweans stand in line for hours just to obtain this small amount of money — money that is rightfully theirs.

Due to their inability to obtain physical dollars and the capital controls that restrict locals from paying for imports with USD, many Zimbabweans have turned to bitcoin — which they can purchase without having access to physical currency — to store their wealth and pay for imports.

“Bitcoin isn’t subject to the central bank measures so it has become an alternative that importers are willing to pay a premium for,” Zimbabwean technology analyst Nigel Gambanga told CNN in a recent interview.

Demand for cryptocurrency far exceeds supply, causing bitcoin to trade at premiums as steep as 100% within the country. On Harare-based bitcoin exchange Golix, for instance, the bitcoin price has risen as high as $13,900 — more than $6,500 above the current global average price. As of November 10th, 2017 – it sits at around $13,500.

But, faced with a choice between dubious bond notes and a currency whose inflation is outside the hands of a central bank, Zimbabweans are willing to pay that price.

goldman sachs bitcoin

Goldman Sachs chief executive Lloyd Blankfein is not comfortable with bitcoin, but he does not want to rule out its potential to disrupt the accepted notion of what constitutes “money”.

Speaking with Bloomberg TV at the Goldman Sachs Sustainable Finance Innovation Forum in New York, Blankfein explained that although the concept of digital currency gives him a “level of discomfort,” he does not want to dismiss it out of hand.

“I have a level of discomfort with it, as I have…with anything that’s new,” he reflected, “But I’ve learned over the years that there’s a lot of things that work out pretty well that I don’t love.”

As an example, Blankfein says that when he first encountered the cell phone, he thought it was a ludicrous invention that no one would want. “I missed that one,” he joked.

He notes that, similarly, people have initially expressed discomfort with new incarnations of money as it has evolved from a hard asset into paper currency backed by a hard asset into its present state as a currency backed by government fiat.

“Maybe in the new world, something gets backed by consensus,” he said, referring to the fact that cryptocurrency’s value is backed by neither hard assets nor government authority. “Instead of a government fiat, maybe it’s a consensual arrangement by people that agree that it’s worth something.”

Blankfein’s open stance on bitcoin provides a stark contrast with that of JPMorgan Chase chief executive Jamie Dimon, who has called the cryptocurrency a “fraud” on multiple occasions and has said that bitcoin investors — a group that includes his own daughter — are “stupid”.

“It’s not my natural state of comfort,” Blankfein continued,  but…if we went into the future and bitcoins were successful, I would be able to explain how it was a natural evolution from hard money….Maybe 200 years from now even someone like me might be comfortable with it,” he concluded, “And that’s why I say that I am open to it.”

wall st bitcoin

Wall Street analyst Tom Lee believes that bitcoin’s enormous upside makes it an “important” asset for investors to own.

Lee, a managing partner at Fundstrat and a former chief equity strategist at Goldman Sachs, explained his reasoning earlier this week at Yahoo Finance’s All Markets Summit, stating that bitcoin represents a “huge revolution in terms of decentralized control”:

“It’s a huge revolution in terms of decentralized control,” Lee said. “It’s biomimicry, finally, in the technology industry. A proper structure for maintaining encryption and security. But because of the nature of blockchain it’s also an asset class.”

The market strategist, who has been described as one of Wall Street’s “biggest bears”, is quite bullish about both the short- and mid-term prospects of the bitcoin price.

Wall Street acknowledges Bitcoin’s rise

He believes that increasingly, younger investors will begin to use bitcoin as a store of value instead of precious metals, which served this purpose during the pre-digital era. Moreover, he notes that the bitcoin price is uncorrelated to equities and traditional market factors, making it an “important security” for investors to own.

“And I think this year has proven that Bitcoin is uncorrelated to equities, gold, interest rates, commodities. It’s an important security, I think, for investors to own.”

Using a model based on Metcalfe’s law — which states that the value of a network is proportional to the square number of that network’s user base — he has established “conservative” bitcoin price targets of $6,000 by mid-2018 and $25,000 by 2022.

“If you modeled something as simple as square the number of users plus transaction value, it’s explained 94% of [Bitcoin’s price appreciation] this year,” Lee said. “Using a 90% deceleration of both factors [in Metcalfe’s Law] next year gets you to $6,000 by mid-2018”.

 

bitcoin cash price

The bitcoin cash price climbed approximately 20% on Wednesday following the announcement that its network will undergo a hard fork on November 13 to update its consensus algorithm.

Bitcoin Cash to Hard Fork on November 13

Earlier this week, Bitcoin ABC announced that it would release bitcoin cash software that would activate a hard fork — a protocol upgrade that is incompatible with legacy software versions — on November 13. This will be the cryptocurrency’s first official hard fork since August 1, when it was created by forking the bitcoin blockchain.

During its first three months, bitcoin cash has been plagued by severe hashrate and blocktime fluctuations, problems that stem from the structure of the network’s difficulty adjustment algorithm (DAA). Under the network’s current consensus rules, miners have been able to exploit the DAA to ensure maximum profitability, causing inconsistent blocktimes and a rapidly-inflating coin supply.

The proposed hard fork updates the DAA to adjust dynamically to rapid hashrate shifts and target a mean block interval of 10 minutes, with the intent of bringing stability to the network — and the cryptocurrency’s economic prospects.

Although there is agreement that the DAA needs to be upgraded, there has been some dissension within the community about the process through which Bitcoin ABC proposed the fork. Bitcoin Classic developer Thomas Zander was particularly critical, accusing Bitcoin ABC of favoring the DAA proposed by one of its developers and making the decision behind closed doors.

Bitcoin Cash Price Posts 60% Weekly Gain

Nevertheless, consensus appears to be coalescing around Bitcoin ABC’s proposal, preventing a disastrous situation in which bitcoin cash would undergo a blockchain split and splinter its community into competing portions. This development restored trader confidence in the bitcoin cash price’s short-term prospects and enabled the cryptocurrency to resume the bullish trend it began last week.

After beginning the day at $440, the bitcoin cash price rose nearly 20%, fueled by heavy volume on South Korean exchanges. Before long, bitcoin cash crossed the $500 threshold,  and it has since extended to a present value of $521. Bitcoin cash has now posted a 7-day gain of nearly 60%, enabling its market cap to swell to $8.7 billion. Bolstered by this advance, bitcoin cash seized the third spot in the market cap rankings from ripple, which is currently valued at $7.4 billion following a daily decline of 4%.

The Barry Silbert-led investment firm Grayscale has submitted an official filing for the Zcash Investment Trust with the U.S. Securities and Exchange Commission (SEC).

As first uncovered by WhalePool, a prominent cryptocurrency trading group, Grayscale filed a “Notice of Exempt Offering of Securities” with the SEC earlier this week. The filing states the firm’s intent to sponsor a trust that will invest in Zcash, an anonymity-centric cryptocurrency that just celebrated its first birthday and currently holds the 16th spot in the market cap rankings with a total valuation of about $591 million.

The filing indicates that the trust already has nine investors who have contributed a combined total of more than $11.6 million, although the minimum investment threshold is much lower at $10,000. Initially, the trust will only be available to accredited investors.

Grayscale — a subsidiary of the Digital Currency Group — recently surpassed $1 billion in assets under management (AUM). Most of those assets are concentrated in the Bitcoin Investment Trust (OTC: GBTC), a publicly-listed security that is currently traded over-the-counter (OTC) and can be purchased through any brokerage account. Wall Street analyst and bitcoin bull Tom Lee recently called GBTC an “attractive” investment, predicting that it could triple in value over the course of the next five years.

Although many firms have filed to launch exchange-traded funds (ETFs) that either track the price of bitcoin or hold the asset directly, the SEC has yet to approve one. Consequently, GBTC remains the only U.S. exchange-listed vehicle that gives institutional investors exposure to crypto assets.

Grayscale has also sponsored the Ethereum Classic Trust, although, like the Zcash trust, this product is currently only available to accredited investors. Since launching in April of this year, the underlying assets represented by Ethereum Classic Trust shares have risen in value from $4.30 to $10.14 and the trust’s AUM has tripled to about $36 million.

The firm has not yet confirmed the news of the Zcash Investment Trust, but it did hint that it would announce “additional investment products” in a tweet posted two weeks ago.