To those of us who follow history and current world events, the country of Zimbabwe has been on our radar for the past many years due to its dysfunctional economy and political instability. Things came to a head in early November when the news came of a potential coup by the Zimbabwe Defence Forces, who took control of the Zimbabwe Broadcasting Corporation and put President Robert Mugabe under house arrest.
Per Wikipedia, this southwestern African country of approximately 16 million people has a rich and proud history. While under British colonial rule for the majority of the 20th century, it was called Rhodesia. Then, in 1980, Rhodesia was was granted its independence and renamed Zimbabwe. Not long afterward, Robert Mugabe became the president. He remained their leader until November 2017.
The economy did improve following independence, and continued to improve through the 1990s, but after that it began to slide. When a land redistribution scheme was implemented in the early 2000s, that’s when the economy really began to tumble. Zimbabwe is renowned in the economic world for experiencing a grand scale of hyperinflation, which reached 500 billion% in 2008.
When the coup took place, forcing Mugabe’s resignation, the nation had an unemployment rate of 95%, not a single operating bank, and no mechanism to process international transactions. With import and export activity constituting 75% of the nation’s GDP, this was catastrophic. For a country so rich in mineral resources, including gold, platinum, and diamonds, such poverty and dysfunction was a clear sign that things had been gravely mismanaged.
In Walks Bitcoin
It would be great to see a graph of their growth, but that’s not currently available. What can be surmised is they grew slowly in the beginning, as we do know that the exchange processed approximately $100,000 for all of 2016.
As the country moved closer and closer to complete economic collapse, activity on the Zimbabwean exchange climbed higher and higher. By October of 2017, Golix was processing over $1 million in transactions per month.
Let’s put this into context. Zimbabwe’s estimated nominal GDP for 2017 is $17.1 billion. Annualized, Golix is processing over $1.2 billion in cryptocurrency transactions. Granted, this will only grow, but we’ll stick with the $1 million monthly figure. That would equate to 7.07% of the nation’s GDP. Golix began in very late 2014, and by the end of 2017, less than 3 years later, they are now on par with tourism, listed as a “major industry” in Zimbabwe, and constituting 8.1% of GDP.
Why This Should Matter Globally
Zimbabwe is a textbook example of how the blockchain steps in to fulfill needs when there’s literally nothing else available. Can cryptocurriencies be used as money? You bet. Can they sidestep governmental or economic shortfalls? Absolutely. Can they be implemented quickly? Affirmative.
This small exchange went from zero to over $1 million per month in less than 3 years, processing enough transactions to equal 7.07% of the domestic GDP. We should all be standing up and taking notice of how phenomenal this is and what we can learn from it.
For any who may want to point a finger at blockchain technology and call it all kinds of names, look at Zimbabwe. Bitcoin helped save lives, I’m sure. Bitcoin kept the lights on. Bitcoin helped factories and businesses order international parts so their economic activity could continue and people’s lives would be better. When everything else failed or was failing, the blockchain came to the rescue.
We reached out to Golix for a comment on where they might see the exchange going, but there was no response. With bitcoin essentially going up, up and away—in essence going parabolic, but according to Metcalfe’s Law of mathematics we’ve only just begun—the future appears bright, indeed, in Zimbabwe and everywhere else. Happy investing, everyone!