Bitcoin: Zimbabwe launches gold-backed digital currency

• Zimbabwe’s central bank has proposed issuing a virtual currency backed by gold as a legal tender.
• This plan is part of an attempt by the government to prevent a further decline in the country’s currency against the dollar.

Recently, many countries have sought ways to reduce their dollar dependence and Zimbabwe has not been left behind. Zimbabwe’s central bank has proposed issuing a virtual currency backed by gold as a legal tender. In accordance The Sunday Mailwho had a candid interview with the Governor of the Central Bank of Zimbabwe, Dr John Mangudya, the plan allows Zimbabweans to hedge against currency instability by exchanging small amounts of their local currency for the virtual gold coin.

This plan is part of an attempt from The authorities to prevent a further decline in the country’s currency against the dollar. According to Zibambwen Official, this will help to strengthen the domestic currency and prevent further decline of the country’s currency in relation to the dollar.

Zimbabwe launches gold coin project to tackle inflation

Last year, Zimbabwe launched gold coins to absorb excess cash and support the domestic currency. The country has had a troubling history of inflation since a severe hyperinflation problem hit the country in 2008. This made it difficult for them to lower interest rates. The official exchange rate between the Zimbabwean currency and the US dollar is 322 ZWL, at the launch of the gold coin for approx. 8 months ago a coin cost 1824 dollars.

According to Dr Mangudya, the recent currency volatility is a result of market participants’ expectations of an increase in the availability of foreign currency when the tobacco bidding season starts in March.

Since the bidding season began, Zimbabwe has shipped over 54.9 kg of tobacco worth $307 million. In addition, it had exported 57 million kg for a total of 295.5 million dollars in the same period the previous year.

Due to their financial difficulties, many African nations have increased their acceptance of cryptocurrencies. Accordingly, international money transfers, the Middle East and North Africa are the areas with the fastest growing use of cryptocurrencies, as reported by Chainalysis.

Currencies backed by cryptocurrency

It goes without saying that there have been many previous attempts to digitize physical gold holdings.

The Central Bank of Zimbabwe can take ideas from the likes of Perth Mint Gold Token (PGMT), Meld Gold by Algorand (MCAU), DigixGlobal (DGX) and many more. Created by prominent figures in the cryptocurrency industry, these tokens provide investors with another method of purchasing gold. And they can do this without having to keep them individually.

Blockchain technology providers often work with experts in the field precious metals trading and storage when the currency is backed by gold.

One such partnership is between Aurus and the precious metals factory SEMPSA JP. The firm provides gold suppliers with tokens backed by gold and silver, thanks to the partnership. Tokenized gold makes it easy for vendors to buy smaller weights, while relieving professionals of the burden of storage. Gold-backed cryptocurrency can lower entry requirements into the investment category since no real metal needs to be handled when virtual assets are exchanged.

Crypto News Flash does not endorse and is not responsible or liable for any content, accuracy, quality, advertising, products or other material on this site. Readers should do their own research before taking any action related to cryptocurrencies. Crypto News Flash is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned.