Bitcoin - Crisis Currency in Hotspots
About a third of the customers queuing at La Maison du Bitcoin’s teller windows in Paris aren’t speculating on the value of the cryptocurrency. They’re sending digital money home to Africa.
“In many countries in Africa, there are far more cellphones than bank accounts,” said Manuel Valente, co-founder of La Maison. “For bitcoin, all you need is a phone.”
Zimbabwe, where the price of bitcoin spiked to double the international rate after this week’s military takeover, shows Jamie Dimon, Axel Weber and other cryptocurrency skeptics where the real-world use of bitcoin, and possibly its future, lies. It’s becoming the preferred way for residents of failing economies to transfer money without dealing with banks, protecting their savings from political turmoil, and avoiding the local currency when its value declines due to inflation.
There’s no data on how much digital money leaves industrialized nations for the developing world. Part of the allure of electronic cash is the ability to transfer it anonymously. But as events in Zimbabwe have confirmed, bitcoin, the world’s most popular cryptocurrency, is most attractive when confidence in institutions falls.
‘Safe Haven’
“Bitcoin is a safe haven for people around the world who don’t trust their governments,” said Andrew Milne, chief investment officer and co-founder of Altana Digital Currency Fund, a $22 million hedge fund that invests in cryptocurrency assets. “There are many countries where people are looking for an asset that isn’t vulnerable to banks blowing themselves up.’’
Zimbabwe gave up its own currency in 2009, the same year bitcoin was born, after hyperinflation led to the printing of a 100 trillion Zimbabwean dollar note. The country uses the U.S. dollar, the South African rand and digital money.
People buy and sell bitcoins on a secure peer-to-peer network that doesn’t rely on any government or central bank.
Trying to control it is “like trying to catch water,” said Alex Tapscott, chief executive officer of NextBlock Global Ltd., a venture-capital firm that invests in startups involved in blockchain, the shared digital ledger that records transactions made with cryptocurrency.