Business and cryptocurrency: How digital assets impact entrepreneurship development in Zimbabwe

Just in case, a cryptocurrency is a digital currency created with the goal of allowing for a decentralized system of banking that uses cryptography to maintain records of transactions,

In simple terms, crypto is a way to own, store, and transfer money without the use of a bank.

It is an excellent idea, and while it’s still not the main money-holding space for everyone, yet, it is also a great digital asset and one of many good investment strategies, especially in Zimbabwe. 

Zimbabwe is a big nation with a lot of culture and natural beauty. However, they have had some problems with their currency.

In this article, we’ll go over some of the main ways that crypto and digital currencies have affected business development in Zimbabwe. 

Before we begin, it is important to note that the Reserve Bank of Zimbabwe, or RBZ, warns against the use of cryptocurrencies as a form of traditional payment, holding, or trading.

Even so, there are still established locations where you can buy and sell crypto in the country in the form of exchanges. 

When considering the present state of affairs in the market, it is clear that crypto is not something that can be halted. One thing to keep in mind for countries like Zimbabwe is that cryptocurrency is more than just a means of payment for something. 

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Since it is a decentralized currency, it is an excellent investment to have added to your portfolio.

When it comes to its economy, Zimbabwe is no new to experiencing difficulties. Allow me to provide you with a concise overview of their economy!

They’ve seen a lot of hardship and struggle with their bad case of hyperinflation in the 2000s, a period where their inflation rate consistently grew 100% and more every month!

During this period, people needed something stable to hold onto in terms of currency, and everyone went for the US dollar and the South African Rand. 

Zimbabwe’s primary source of economic growth is agriculture. It gives the people jobs and contributes to the GDP immensely. Just like many other countries, they are also known for their mining industries.

Gold, platinum, diamonds, and chrome are just a few of the natural resources that Zimbabwe is wealthy in. Manufacturing is also an excellent source of employment in the country; however, because of the unprepared infrastructure, they’ve not been as successful as other fields. 

In all likelihood, every sector of the economy in our nation has seen its share of difficulties, which has made it difficult for the economy to show signs of expansion. 

Everyone wants to own Bitcoin, and in Zimbabwe, this is also the case. 

The fact of the matter is that Zimbabwe has had a lot of trouble with hyperinflation, resorting to using foreign currencies like the USD or ZAR. However, crypto is also used as an alternative hedge to protect from inflation. 

While the use of the currency in a traditional sense is prohibited, it can be used to store value. Now there are two things to note: 

1. Zimbabwe's government recognizes that it’s people like the use of digital currency. 
2.  But you can’t use a highly volatile currency as an inflation hedge, as it defeats the whole purpose.

So what does the Reserve Bank of Zimbabwe do?

They create the perfect solution, gold-backed tokens, which are a form of digital money back by the country's gold supply. 

In the first stage of the initiative, investors in digital tokens backed by gold will be allowed to keep and trade their tokens; in the second stage, they will be able to transact and make payments, according to the RBZ. 

The short answer is it can, but it will likely not last. 

According to Paul and Chitambara, the digital token backed by gold might provide investors with a means to diversify their holdings and perhaps serve as a store of value in the near future. 

The coin may not be able to solve hyperinflation on its own, but its low adoption rate suggests otherwise.

There was initial enthusiasm for the digital token with a gold backing when it was released. In the first four days after the token issue, 135 applications were received, with 132 of the applications coming from entities seeking to convert Zim dollars. The total value of these applications was around $12 million.

Nonetheless, the currency's decline against the dollar persisted. According to Investing.com, the value of $1 USD increased to 1,109 new Zim USD on May 8, the day of the tokens' issuance, from 949 USD a month before.

Just like in any country in Zimbabwe, people are skeptical of crypto, and with good reason. It is very volatile and non-regulate. There is also a connection between crypto and illegal acts, which may cause some individuals to be reluctant to experiment with it or to have a great deal of confidence in it.

However, since digital currencies are good enough for the government, that, at least, should stand for something on its own.

There is still a demand for alternatives, even if the historical backdrop of hyperinflation caused a move towards stable foreign currencies. 

Coincident with the Reserve Bank of Zimbabwe's warnings, cryptocurrency has emerged as a viable investment option, providing a decentralized replacement. 

The introduction of digital tokens backed by gold is an attempt to tackle volatility, but the viability of this strategy in the long run is unclear. Skepticism permeates public opinion, driven by worries about instability and links to illicit pursuits. 

However, digital currencies have gained legitimacy with official acceptance, suggesting a complex future for cryptocurrencies in Zimbabwe.

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