Join

Enter Details

Comment on stories, receive email newsletters & alerts.

@
This is your permanent identity for Business Insider Australia
Your email must be valid for account activation
Minimum of 8 standard keyboard characters

Subscribe

Email newsletters but will contain a brief summary of our top stories and news alerts.

Forgotten Password

Enter Details


Back to log in

Zimbabwe's instability had a bizarre side-effect: the nation's bitcoin market went bonkers

Zimbabwe Army General Constantino Chiwenga Commander of the Zimbabwe Defence Forces (R) and Valerio Sibanda Commander of the Zimbabwe National Army (L) address a media conference held at the Zimbabwean Army Headquarters on November 13, 2017 in Harare. Jekesai Njikizana / AFP / Getty Images

  • The highest price paid on a cryptocurrency exchange in Zimbabwe overnight was $US13,499 — almost double prices in the US
  • The price action comes amid a military invention in the African country, which doesn’t have a currency of its own
  • Despite wild swings in prices on the local exchanges, peer-to-peer transactions appeared to be less volatile.

  • Bitcoin prices have jumped back above $US7,000 on global benchmark exchanges, but the latest moves appear small compared to overnight action in Zimbabwe.

    Zimbabwe’s military stormed the capital city of Harare yesterday and took control of the state broadcaster.

    Zimbabwean President Robert Mugabe has been placed under house arrest and may step down later this week.

    That led to reports that bitcoin prices on a cryptocurrency exchange in Zimbabwe called Golix had skyrocked past $US13,000 — almost double the current value on other major exchanges such as Bitfinex.

    Zimbabwe doesn’t have its own currency, with the US dollar and South African rand both accepted as legal tender since 2009 after hyperinflation left the previous currency worthless.

    The Golix website showed settled bitcoin transactions ranged from $US8,000 to as high as $US13,499 over the last 24 hours, although its unclear whether those figures referred to settlements of at least one bitcoin, or a percentage of bitcoin.

    In other words, if someone purchased 0.25 of a bitcoin at $US13,499, the actual money paid would be around $US3,375.

    In addition, there was a wide gap between the bid and ask spread for bitcoin trades on the Golix website overnight, with the most drastic discrepancy showing a sell offer (ask) at $US16,000 against a buy offer (bid) of just $US5,000.

    A short time ago, the website showed that bitcoin was trading at $US10,250 — still around a $US3,000 premium to current prices on larger exchanges.

    According to a report in Quartz, the higher prices were most likely due to a lack of liquidity on the Golix exchange, which appears to be the only cryptocurrency website in Zimbabwe.

    The Golix website says the exchange has processed transactions for 16.2878 bitcoin over the past 24 hours. As a comparison, larger exchanges in the US such as Bitfinex process tens of thousands over the same time-frame.

    The Quartz report added that where countries don’t have large clearing exchanges, peer-to-peer transactions are more common.

    The biggest global platform for peer-to-peer bitcoin trades is localbitcoins.com, and a search of brokers in Zimbabwe shows transactions more in line with the current global price of bitcoin.

    So while at least one transaction may have been cleared at the impressively high price of $US13,499, it doesn’t appear that a large number of Zimbaweans are paying top dollar in a mad scramble for cryptocurrency as military tanks roll through downtown Harare.

    Here’s the price for bitcoin in US dollars a short time ago on the Bitfinex exchange, via Investing.com.

    NOW WATCH: Money & Markets videos

    Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.