ZIMBABWE has emerged as one of the top five African countries utilising Bitcoin and other digital currencies, according to researchers at Equity Axis.
The report from Equity Axis coincides with recent efforts by Zimbabwean authorities to gain a deeper understanding of the cryptocurrency landscape.
To this end, a committee was established to consult with market players, concluding its exercise this week.
Equity Axis highlighted that studies by leading Chinese analysts had already revealed high levels of interest in cryptocurrencies within Zimbabwe.
“Zimbabwe's foray into the world of cryptocurrencies mirrors the broader trends witnessed across the African continent,” Equity Axis stated.
“According to data from Chainalysis, the top five African countries embracing Bitcoin (BTC) and other digital currencies are South Africa, Nigeria, Zimbabwe, Kenya, and Ghana. This underscores the growing demand and active local communities surrounding these innovative financial technologies.”
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The report noted that the cryptocurrency landscape in Zimbabwe is ‘intricate,’ with the adoption of digital assets primarily driven by younger people trading on platforms like MetaTrader.
However, only 5% of traders are achieving consistent profits, while the majority are effectively ‘gambling’.
“Zimbabwe's cryptocurrency landscape exhibits a complex reality,” the report stated.
“When transacting in the local ZiG currency to purchase cryptocurrency on such platforms, the exchange rate to the US dollar is often exorbitantly high, averaging around ZiG24 per dollar.
“This inflated rate insulates cryptocurrency sellers from exchange losses, allowing them to capitalise on favourable margins.
Regrettably, this parallel market exchange rate has become the de facto standard for many foreign exchange dealers, who then apply a considerable premium over the official ZiG/USD rate, which typically fluctuates around ZiG13,5 per dollar.
“This dynamic creates a challenging environment for cryptocurrency adoption,” the report said.
“The substantial disparities between official and black market exchange rates introduce significant friction and distortions into Zimbabwe's financial system.
“The prevalence of profiteering by intermediaries further compounds the obstacles faced by those seeking to utilise digital assets as a means of transaction or store of value within the local economy,” the report concluded.