Fiat currencies have been struggling in the last few months. Currently, the pound and euro have dropped in value, and their value is less than the American dollar. The impact has been worse for many other smaller currencies worldwide. Developing countries from all over the world are recording record-breaking inflations every month. This has forced countries to figure out ways to solve this problem.
A few months ago, the Central African Republic shocked the world by legalising and adopting Bitcoin as a legal tender. They are working on implementing this by setting up a crypto haven called Sango. This is where all the infrastructure for the adoption originates. The other country that has done something to beat inflation is Zimbabwe.
Zimbabwe and inflation
According to the most recent reports from Zimbabwe, inflation is crippling the economy again. If history is anything to consider, the country once struggled with a similar issue in 2008. The problem was so big that the government issued a $100 billion bill worth almost nothing outside the country. This hyperinflation led the government and the people to prefer to hold assets rather than have money in the bank.
Finally, they were fed up with the currency and abandoned it for a new currency, which they have until today. Although the current currency was meant to be a solution to the old one, history is starting to repeat itself. Current records show a 190% inflation in the currency in the last few months. This is the highest recorded in Africa this year. If they do nothing to solve this issue, Zimbabwe will likely end up with another $100 billion bill again. This is why the government has decided to issue gold coins.
The coins are minted to be specific to the country. The government plans to have the coins as legal tender for transactions in the country. Considering the international market controls the price of gold, this might be a viable solution to the problem. But there are some issues or concerns the citizens have about the change.
Gold coin challenges in Zimbabwe
The main challenge people have with these gold coins is cost and divisibility. Gold is an expensive commodity and small enough to hold between your hands. However, its value is enough to buy you a house in Zimbabwe. The locals are afraid that only the rich will use the coins. Since the coins are so expensive, people cannot buy small and cheap things using the coins.
Cryptocurrency is the solution to inflation
Cryptocurrency, especially Bitcoin, is a good solution to this challenge. Bitcoin is digital gold and has the potential to solve all these issues. The international market controls its value; this will help reduce inflation in the country. The decentralised nature of the coin is an added advantage to the country. Another reason Bitcoin is the better option is that the value is affordable. People can use the smallest value, Satoshi, to buy needed products. The divisibility of fractions is a good solution to the value of a gold coin. Zimbabwe should consider adopting Bitcoin as a legal tender for transactions.