Bitcoin is apparently surging in Zimbabwe after the military seized power in an apparent coup. Bloomberg reports that bitcoin is trading in Zimbabwe at over $13,000, nearly double the global price of bitcoin. But that’s not quite the whole picture.
The price that Bloomberg and other media have quoted comes from a cryptocurrency exchange in Zimbabwe called Golix. The Golix website shows a wide spread between bids and asks, with the current price settling at around $13,500. But go to another marketplace for bitcoin in Zimbabwe and you will see much lower prices.
Golix appears to be the sole cryptocurrency exchange in Zimbabwe. But most markets that aren’t well served by exchanges, like Zimbabwe, usually have a thriving peer-to-peer scene. That’s what you see when you go to LocalBitcoins, the biggest global platform for peer-to-peer bitcoin trading. Zimbabwe’s LocalBitcoin brokers are quoting prices around $7,000, which is in line with the global price of bitcoin.
It’s the brokers who offer to settle transactions in cash, instead of online payemnts or via bank transfers, who are demanding a steep premium in Zimbabwe. They are asking for $17,000 to $20,000 a coin from buyers who pay them in physical US dollars.
So what explains the inflated prices on Golix? It’s probably just low liquidity. Golix’s website shows that it traded just over 7 bitcoins in the last 24 hours, and about 147 coins over the last 30 days. That’s in contrast to tens of thousands of bitcoins traded over LocalBitcoins globally each month, or tens of thousands per day on the biggest US dollar exchanges, like Coinbase or Bitfinex.
LocalBitcoins, in fact, has been rocketing in popularity over the years. It doesn’t show data for Zimbabwe, but volumes on the platform have risen significantly around the world in recent months.