The global economy remains in the grip of inflation, and Ethiopia continues to feel its impact. While not out of control as before, the situation has undeniably worsened compared to March 2018. Back then, 1 USD traded for around 22 ETB officially, with the black market rate hovering near 25 ETB/USD. Fast forward to January 2024, and the official exchange rate has climbed to roughly 56 ETB per USD, with estimates suggesting the black market rate could be as high as 115 ETB/USD.
That's a huge margin. In recent years, there has been a worldwide rise wave of ethnic conflict, finger-pointing, and apparent inequality. It is visible in Ethiopia too. While this may seem unrelated on the surface, it is a growing hypothesis that these occurrences may all be linked to the inflationary nature of the global economy. USD for instance is no longer linked to a scarce resource, there is nothing stopping the Federal Reserve from printing it excessively leaving countries that rely on holding it vulnerable to other nations monetary policies.
Bitcoin, unlike fiat or other crypto, offers various avenues through which Ethiopia as a country can work around this; relying some of our energy and forex on an asset that is created to be at the mercy of the global free market, rather than at the mercy of few people’s hands. We will discuss three primary methods through which we believe Ethiopia as a country could benefit: Mining, Hodling, or seeing it as tender, and combined use.
Until recently, the global economy was mostly reliant on a somewhat scarce form of money, namely gold. Scarcity made the money valuable and made it impossible for anybody to manipulate and multiply it at will. In the past, literal paper money was often used to represent a certain amount of gold, with the promise that the money given to you by the government actually represented gold that the government’s bank held for you.
1971 is the year that gold and money got officially separated. Before then, there was a period (unclear how long) when the US was pretending that you could exchange USD for gold when you could not. As long as you didn’t ask for too much gold, the US banks were happy to abide. But, because their supply did not match the number of papers they had secretly printed, President Nixon eventually had to formally announce that the US would no longer be giving Gold for USD. Officially backing the value of the currency by the promise of the government, allowing them to print as they pleased.
That situation is not so different from the situation Ethiopia is in right now. When the US prints money for itself, the USD that everyone, including Ethiopia, already has loses value. And to get enough USD for imports, Ethiopia then has to export more and sacrifice increasingly more value and seemingly increase its trade deficit.
There are countless reasons why Ethiopia and why now. Ethiopia seems to be the country best positioned to begin embracing Bitcoin for various reasons:
If the GERD is successful and put into use as planned, the average Ethiopian’s life would improve - not just because they would have access to electric power 24/7, but also because their country would have more foreign currency reserves that it can use to improve the lives of its citizens.
Holding some BTC in a reserve is likely going to guard the ETB from slumping, more effectively than the plans the National Bank has been implementing and considering to our knowledge.
El Salvador became the first country to start treating Bitcoin as legal tender. It means that within the country people can use it to buy and sell things legally, including but not limited to paying taxes and employees with it.
As the U.S. removes Ethiopia from a critical trade program, it’s clear that the African nation should focus on finding sovereign value.
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