• Fri. Jul 12th, 2024

Zimbabwean Government to Launch Gold-Backed Cryptocurrency

Xavier Jackson

ByXavier Jackson

Apr 23, 2023

The government of Zimbabwe has announced plans to launch a cryptocurrency backed by gold. It is in line with the government’s attempt to curb inflation which has ravaged the country’s local currency, the Zimbabwean dollar.

The digital currency to be issued by the Reserve Bank of Zimbabwe will serve as a legal tender in the country. By allowing small amounts of Zimbabwe dollars to the digital currency, Zimbabweans will be able to hedge against the inflation eating into their currency.

The Zimbabwean dollar has greatly diminished against the U.S dollar, making it very weak for international trade. However according to the Central bank governor John Mangudya, the exchange rate is expected to stabilize next week when farmers receive payments for their tobacco in U.S dollars.

Zimbabwe has been fighting inflation and weak economy for years. The situation only got worse, and the government adopted the U.S dollar as legal tender to help. Not much came out of this strategy, so the Zimbabwean dollar was re-introduced. This also has not helped, so the country is looking for alternative ways of saving its economy.

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Crypto Adoption On the Rise in Africa

Despite several warnings from the IMF and World Bank, the rate of crypto adoption in Africa has been on the increase. This is as a result of many economies struggling such as is the case with Zimbabwe. While some countries like Nigeria are fighting crypto adoption, the citizens are among those using cryptocurrencies the most globally.

There are also countries that have embraced cryptocurrencies at the government level. One of them is the government of the Central African Republic which adopted Bitcoin as a legal tender last year. This attracted a lot of criticisms from IMF and World Bank, but the country hasn’t looked back.

The move was in a bid to save the country’s dying economy, just like in Zimbabwe. The Central African Republic may have taken a cue from El-Salvador, a Latin American country that became the first country ever to adopt Bitcoin as a legal tender. This trend will likely continue in Africa as more inflation-stricken economies see the importance of crypto in bringing financial liberation.

Crypto as Hedge Against Inflation

Most countries struggling with inflation do not have a solid financial base upon which their currencies stand. Bitcoin is regarded as a hedge against inflation and many investors have adopted it as such. Since its creation in 2009, the “digital gold” has increased remarkably in value, reaching over $60,000 per BTC in 2022.

With such an asset as legal tender, any country can easily over come inflation and be on the path to growth. The world may be starting to see it, which means crypto adoption will be on the increase. It is also remarkable that Zimbabwe isn’t looking to create a digital currency pegged to its weak currency.

Xavier Jackson

Xavier Jackson

Xavier Jackson is a talented and versatile news writer with a knack for delivering compelling stories. With a dedication to accurate reporting and a captivating writing style, his articles provide readers with insightful and thought-provoking perspectives on current events.

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