Most people who deal with crypto currencies are used to price fluctuations. It is also not uncommon for the price to change in the double-digit percentage range within a day. But why do these fluctuations occur not only within the price but also between different stock exchanges?
The answer can be sharpened to a single sentence: The Bitcoin price is not fixed anywhere. In turn, it receives its value from supply and demand.
Because the price for a Bitcoin always consists of how much a seller charges for it and how much a buyer is willing to pay for it. The stock exchanges then take on a mediating role and thus ensure an agreement between the parties. Depending on which exchange you are currently trading on, this difference (less costs incurred) is made up differently.
The supply and demand aspect is joined by geopolitical factors. Depending on where the respective stock exchange is located, the price may be influenced by regulatory hurdles such as taxes or by the economic situation. The country of Zimbabwe shows the extent to which this can happen.
The case of Zimbabwe – extreme example of price fluctuations for Bitcoin trader
In Zimbabwe, the Bitcoin price is extremely different from the current market price. Read more about it: Bitcoin Trader Review 2018 » Full Scam CheckIt is quoted at 17,379 US dollars at the time of publication. The average price of the exchanges listed on Coinmarketcap is 11,380 US dollars for comparison – a difference of almost 6,000 US dollars. In order to explain this significant difference, it is necessary to take a look at the economic and political Bitcoin trader situation.
When autocratic President Mugabe was replaced by the military, the country was already in financial ruin. The Zimbabwe dollar was completely abolished after an inflation of up to 230 million %. It was replaced by the US dollar, among other things. Due to a lack of exports, however, there were not enough of these, and physical banknotes are still in short supply.
But even the US dollar is not worth as much as it should be. In January 2017, for example, 120 electronic US dollars were paid for 100 US dollars of physical money. By November, the figure had already risen to 180.
In addition, the banks cannot print the US dollar independently, as it is a foreign currency. The result is that hardly any money can be paid out at ATMs, transfers abroad are virtually impossible – even the government has problems transferring money abroad.
Lack of trust in crypto trader banks
There are also many people who work abroad and want to support their families in Zimbabwe. The problem is that the banks devour a large part of the money sent. Read about it: https://www.geldplus.net/en/crypto-trader-review/ So there is a lack of trust in the crypto trader institutions and foreign currencies quickly lose value in Zimbabwe.
So the call for alternative currencies was great. In spite of the repeatedly lacking volatility of the crypto currencies, Bitcoin seemed to be safer than the options mentioned here. So many have invested their existing assets in Bitcoin to protect it from depreciation.
Thus it does not fall on the one hand to the inflation and the banks to the victim, on the other hand humans can thereby international payments make.
The numerous possibilities that distinguish Bitcoin from conventional payment methods in the country make it more attractive. Through its usefulness and its function as a store of value, it ultimately has added value. People therefore have more confidence in the crypto currency than in any other alternative.
As a result, sellers can demand more for it and buyers are willing to pay more for it – especially if it means they can get rid of insecure assets from old stocks.
Arbitrage in Zimbabwe? Better not
With a price difference of 6,000 US dollars per Bitcoin sharp trader probably the ears – why not simply transfer Bitcoin to Zimbabwe and make a profit there?
The answer has already been described in principle: The money would probably no longer leave the country. Because in order to register at the African stock exchange Golix, you need a local bank account. Since all Fiat money flows back through the central banks, it either loses value or gets lost on the way.
For the same reason, the people of Simbabe would not buy it on external stock exchanges. The money can hardly cross the borders, simply because it simply does not exist. So the Bitcoin has more value in Zimbabwe as a means of payment and storage than its dollar price.
In principle, the Bitcoin in Zimbabwe receives its value through its applicability. In its original intendi