Zimbabwe resorts to gold coins as local currency tumbles

[bittraffic]

Hard to go back to our old system where money us backed by gold. there is no system that does that anymore even if US will start making it with their political block nor with China. There is no trust anyone as to who will hold the gold reserve because as far as Ii know Venezuelan Gold was never returned to their government when they requested it. Also Russia's gold as well. No country will trust anyone with their gold for the reserve.

Just go digital, CBDC that's where we are going anyway.

[so98nn]

Instead of adopting the US dollar as a legal tender, why not borrow a leaf from El Salvador and Central African Republic and use BTC?

Zimbabwe is not able to do this because there are wider concerns for that country rather than just to download a wallet and start transacting with the crypto currencies.

The internet cost is huge for Zimbabwe and they are almost paying $75 for 1 GB data throughout their country.
This means, if I am an individual who wish to use any desktop wallet for bitcoin which is usually 200-500 MB in size, I would end up paying $40 bucks just to download the wallet!

Just imaging, synching the wallet with global settings, downloading packets of data and using it on regular basis, would cost me more than what can I earn or use. 

[Gozie51]

Instead of adopting the US dollar as a legal tender, why not borrow a leaf from El Salvador and Central African Republic and use BTC?

I think this would have been better for Zimbabwe instead of the dollar since fiat has failed them already. The corruption that collapsed the Zimbabwean currency will also have an adverse effect on the dollar. There is alot of benefit for approval of bitcoin in Zimbabwe and one is that those Zimbabweans working out of the shores of there country can transfer money home through bitcoin and that can rejuvenate their economy through investment and hodling naturally may increase individual earnings and the currency can get back in value.

[stompix]

The internet cost is huge for Zimbabwe and they are almost paying $75 for 1 GB data throughout their country.
This means, if I am an individual who wish to use any desktop wallet for bitcoin which is usually 200-500 MB in size, I would end up paying $40 bucks just to download the wallet!

That's a myth and it was because BBC used an already out od date exchange rate which nobody cared about but stayed there on official sites.
https://zimfact.org/does-1gig-of-data-cost-us75-in-zimbabwe-as-claimed-by-the-bbc/

Besides, electrum is just 40MB and is designed exactly to be lightweight, you won't be reaching that 1GB in years you would exceed that way faster by browsing WoT or looking at cat pics, and when I say faster I mean a few days.

There is alot of benefit for approval of bitcoin in Zimbabwe and one is that those Zimbabweans working out of the shores of there country can transfer money home through bitcoin and that can rejuvenate their economy through investment and hodling naturally may increase individual earnings and the currency can get back in value.

What would be the difference between adopting USD or BTC for the average citizen?
First, they would have to get those BTC , which is the same thing s trying to get USD with a failed currency and will do exactly the same damage to the economy, everyone will rush to sell Zimbabwe currency and buy coins, destroying the peg even more as obviously nobody wants their currency. And after that, where will the money and investment come from magically? In order for the population to make a profit on their bitcoin purchase, they would have to sell it to others at a higher price, you see the vicious circle here?

Bitcoin is money, you need money in order to get money, in order to invest you need to let that money go, it's not something magical, oh we bought 100 BTC our economy will thrive.

Satoshi didn't create Bitcoin to rejuvenate the industry or make some holders rich and never pretend to be a magical cure for everything.
Bitcoin is perfect at transferring value without intermediaries, but in order to do that, you need to have that value in the first place.

[LoyceMobile]

I bet the average person in Zimbabwe can't afford one of those shiny new gold coins. And even if they could, it doesn't solve the problem. The coin is too valuable to buy groceries, so you're stuck with inflation money for that.

They're not going after it either. Currency with a greater value is not very valuable.

A common street joke in Zimbabwe is that a shopper waving a U.S. dollar bill can buy a delicious dinner – but one with a $100 bill will end up with an empty stomach.

Maybe they have a way of creating a gold coin that is worth $1 each.

That's 18 mg of gold, or slightly less than a thousandth of a millilitre. That won't work for gold, and probably not even for silver.

[famososMuertos]

Bitcoin does not improve economies, or rather, it is a great technological tool to start having a change, but like the green currency (USD) that several countries in the world have established as legal tender, it does not work miracles.

El Salvador, I mention it because you quote it but they are different circumstances, very equidistant from Zimbabwe, what they have in common is their poverty and a long list of politicians who do not have been good resource managers.

Any country that has economic indicators that put it in the world top 10 of the best economies, executes any economic measure and has an immediate effect or at least in the short term, results are expected and actions are taken based on those results that can be positive or not, then the same behavior is always expected from the rest of the countries in their economic measures.

So countries like Zimbabwe in the comparison of the macro-economic data that are used at a global level to standardize economies and determine the different positions based on these economic indices, is always at a disadvantage and a lot, that is, the mere fact of applying any economic measure its effect is hopefully months but it can take years and then the result is negative, which is the spiral in which this country finds itself, so then that a country like Zimbabwe adopt^assuming bitcoin is only a desperate measure by its leaders to have a culprit and then justify the bad result by saying that did bitcoin not work.

[ven7net]

It is very sad that such terrible things happen in the world. The use of gold coins in Zimbabwe is probably a desperate move to somehow keep the situation with rising inflation, but whether it helps or not will be seen a little later. As for the proposal to use the US dollar, it is probably not the case that it can be a solution to the problem of high inflation in Zimbabwe, as the US dollar itself, like the US itself, is experiencing similar problems. Perhaps the use of cryptocurrencies could also help in solving this problem, but someone should deal with all this, only in this way can one see a real result in solving the problems associated with high inflation in many countries.

[tbterryboy]

Instead of adopting the US dollar as a legal tender, why not borrow a leaf from El Salvador and Central African Republic and use BTC?

I think this would have been better for Zimbabwe instead of the dollar since fiat has failed them already. The corruption that collapsed the Zimbabwean currency will also have an adverse effect on the dollar. There is alot of benefit for approval of bitcoin in Zimbabwe and one is that those Zimbabweans working out of the shores of there country can transfer money home through bitcoin and that can rejuvenate their economy through investment and hodling naturally may increase individual earnings and the currency can get back in value.

Dollar is still a fiat but dollar is definitely much stronger than some local currencies out there although inflations can't still be totally avoided. Some of us thinks' that btc can solve the issue about inflation but lately it's been proven that it wasn't true at all but it's still better if a country would adopt btc even if not as a legal tender as it can still bring some benefits and one of it is like you said about money transfer.

I am only not sure if investing in btc can help a country itself but it can surely help the people that will do that. The only question that I have in my head right now if is zimbabwe will allow btc because you said that this country is corrupt.

[Zilon]

This might spring up high cases of insecurity in Zimbabwe. If Zimbabwe adopt gold which a valuable and revealing metal, people who have golds in their bags and pockets might have to keep them at home to avoid theft cases and roadside robbery if they wanted fighting inflation in real sense they would have gone for CDBC or opted for Bitcoin because it is cashless, digital, no paper format and a powerful tool for fighting inflation.

[dothebeats]

Can't blame them. Who would continue using a currency that literally has no value anyway? At least in gold they are still getting something in exchange for the goods and the services that they are trying to sell, and somehow they are guaranteed to have those gold exchanged into other currencies or other commodities that they can use while they grip to their reality. Even if they are getting something from using gold on their day to day transactions, you can't really remove the fact that you have to have a system in place that caters to these financial functions and their economy as a whole.

[Sithara007]

They need to understand that the most cost effective way to deal with the crisis is to allow the usage of foreign currecies. They can use either the US Dollar (USD) or the South African Rand (ZAR). How can anyone use 1 oz. gold coin for day to day trading and bill payment? And there are several other disadvantages. How can we make sure that the weight is exactly 1 oz? What happens if someone removes some portion of the metal? Gold is useful as a store of value, but it is not suitable to be used as a currency in physical form.

[Majestic-milf]

Tbh, gold is volatile too. And with thier history of dumping fiats that are not favorable or saving them from excessive price hikes, probably they may do same with these coins in the long run
 The introduction of these coins could also lead to high level of insecurity because there are the poor masses who may not be able to afford it and hence cases of thievery.
 I guess they could extend the usage of the dollar as against the earlier intended five years as it seems instead of just boosting their confidence, it is saving them a lot.

[Mr.right85]

I'm failing to see how this approach can actually help with inflation. Gold is used globally by individuals as a hedge for inflation, making gold a legal tender would not necessarily affect spending or inflation rates;

Am trying to see reason with this move towards gold coin or the speculated USD for an official legal tender to help the deteriorating economy situation of there country with local currency. I think there final move towards gold is just in a way, trying to avoid adopting another nation's national currency in the USD=US.

The aim here in gold coin adoption is to have some sort of standardised or reserved currency that the value stays same in the exchange market and almost all there monetary worth could be accounted for in the foreign exchange market as these values would be same everywhere. Coupled with the fact that, there CB don't have to print more notes as per fiat currencies.

What I can't exactly say is, if it's a good move buy I guess what ever helps could go at this point for them.

[BRINIRHA]

When zimbabwe gets to that stage. then it proves how severe the inflation rate in the country is.
and that is very concerning.

Because if the inflation rate is still at a moderate level, then steps such as using gold coins will definitely not be carried out. zimbabwe has come to the point where using gold coins is proving the value of its currency has really collapsed.

Meanwhile, if a country is affected by moderate to low inflation, the following things are usually done to overcome inflation:

1. Fiscal Policy
This fiscal policy is similar to that carried out by developing countries when facing inflation because this fiscal policy itself is related to the entry and exit of a budget in the government. This fiscal policy is carried out by
- increase tax rate
- reduce government spending,
- and make loans.

2. Monetary Policy
This policy is carried out by means of increasing or decreasing the amount of money in circulation. It is hoped that this step can maintain monetary stability with the aim of improving the welfare of the people in the country. another way is by carrying out operating policies on the open market. that can be done by controlling the money supply.

3. Non-fiscal and Non-monetary Policy
This policy is carried out in several ways, namely:
- Increase production hasil
- Facilitate the entry of imported goods
- Stabilize people's income
- Set the maximum price
- Supervision of goods distribution

But the steps above have been taken by Zimbabwe, but because of the severe inflation there, the step of using gold coins is a tough choice that they have to take. I myself wish the best for all countries that are currently experiencing an inflation crisis.

[Kakmakr]

The biggest problem with Zimbabwe is the high levels of mismanagement and corruption in their government. The Mugabe government decided to challenge the "West" and the result was economic sanctions that crippled their economy even further.

At one stage.... their citizens opted to use "sweets" as substitute for small change, because the hyper inflation killed the value of their ZIM Dollars and people rather wanted "sweets" instead of a hand full of worthless fiat currency. 

Bitcoin has also been used as a hedge against inflation, but the lack of Internet infrastructure and also stable electricity and 3rd world education system...has sabotaged it's success.

[trendcoin]

The Zimbabwean government continuously increased interest rates (200% interest rate) to counter inflation, but they did not get a positive result. They should have developed new production economy models instead of increasing interest rates. Interest only stopped production and money flow... Today, they are looking for a solution to the crisis by creating a gold-based currency. This attempt at a solution will create monetary contraction and cause other crises besides inflation. :(

[Oluwa-btc]

I bet the average person in Zimbabwe can't afford one of those shiny new gold coins. And even if they could, it doesn't solve the problem. The coin is too valuable to buy groceries, so you're stuck with inflation money for that.

From the look of the things, it seems only business people are only group with the capacity to buy these gold coins. Correctly said, couldn't agree more.

Noble idea, but for now you can not 100% trust the team and the process. Moreover, the timing of this move as fire fighting you might need a bit of time to see where it goes so as to give a clear judgement. In their perspective this is not to be used as a payment token but a store of value given rising inflation on daily basis.

One major disadvantage is that the coins can not be used as payment tokens which makes them very inferior in the eyes of many. The other aspects is that they are more like bonds usually issued by the state just to raise funds for for their activities.
On where they can lead to I guess nothing very significant can come out of these coins unless there is more education of it to the general public.

https://news.bitcoin.com/zimbabwe-central-bank-gold-coin-sales-to-commence-in-late-july/?s=09


Come 25th July, The sale of the gold coin's are expected to commence, where the buyer's can both make use of them local currency ( fiat ) and USD. Both locally and internationally.
The Gold coins have been named Mosi-Oa-Tunya ( The local language equivalent for the Victoria Falls ).