Cryptocurrencies have seemingly taken a backseat due to a concerted focus on blockchain technology in Africa, but there is still a growing interest and demand for trading on the continent. This was one of the main takeaways from the Blockchain Africa conference held in Johannesburg in the middle of March 2020.
The Blockchain Africa conference, which is the biggest in the continent, has become heavily focused on the technology underpinning cryptocurrencies like Bitcoin and far less so on the crypto trading space. It is a fact that was admitted by event MC Tanya Knowles, who recently became Binance South Africa’s country manager.
It is difficult to get an actual gauge of the volume of cryptocurrency trading and use in Africa due to the seemingly small amount of exchanges across the continent. Nevertheless, a handful of South Africa’s biggest local cryptocurrency exchanges were present at the conference, including AltCoinTrader, Valr and Luno, the latter operating around the world.
Binance, one of the world’s largest exchanges by trade volume, has also launched trading support for South African Rands, making the announcement during the Blockchain Africa conference. Binance currently has trading support in 35 African countries, which suggests that there is a growing demand for cryptocurrency trading platforms across the continent.
Shifting the focus back to Bitcoin
Renowned cryptocurrency trader and analyst Tone Vays was one of the keynote speakers that attended the Blockchain Africa conference in Johannesburg. He was also one of just a handful of people that spoke about cryptocurrency trading and Bitcoin in particular.
In a conversation with Cointelegraph, Vays speculated that many people are still skeptical about the use of cryptocurrencies, which has resulted in a move away from the subject and a focus on the underlying technology:
“There’s a couple of reasons and I think the main reason is around regulation. Bitcoin still sounds bad, everyone is still scared of Bitcoin and they think that it is only used for illicit purchases and blockchain sounds more appealing to the regulators, government entities and businesses.”
Having spent some time speaking to the local cryptocurrency exchange owners that had setup exhibitions at the conference, Vays admitted that he was pleasantly surprised by the interest shown in trading in South Africa:
“I think you guys are the leaders in Bitcoin and anything crypto in the African continent altogether. It might not be crazy to say that all the Bitcoin and crypto activity in South Africa is probably bigger than all the other African countries combined.”
While the local players are still small-scale, Vays said that Binance’s move into the South African space should be a good thing for crypto traders in the country and the continent:
“That’s actually big — Binance offering a Bitcoin-Rand trading pair. It’s important because the Bitcoin in South Africa is trading at a 6-8 percent premium. So with someone like Binance coming in, they have liquidity and as long as they can handle the KYC situation if they can lower that premium it does create a more efficient market. I’m sure it’s frustrating for people to pay 8 percent higher than the spot price.”
Vays was also fairly critical of the shift in focus from Bitcoin and cryptocurrencies to blockchain. Vays maintains that Bitcoin can be useful to businesses, but said that the creation of knock-off blockchain platforms with native tokens does not necessarily add value. It’s part of the reason why he believes that blockchain conferences might not be commonplace in a few years’ time:
“If you’re working on supply chains, there will be a supply chain conference, if you’re working on healthcare there will be healthcare conferences. There are conferences for every field, but blockchain is not a field. There are no internet conferences, it’s a question of how do you utilize the latest tools of the internet in your business.”
Tough times not helping crypto traders
Cointelegraph spoke to Richard de Sousa, founder and CEO of local cryptocurrency exchange AltCoinTrader, to get a sense of the appetite for trading in South Africa. De Sousa estimated that the platform currently caters to around 500,000 users that are actively trading, with 90% of them being South Africans. He also mentioned that they have some users from as far afield as Russia and the United States.
Speaking from a South African perspective, De Sousa believes that the current economic climate has not made things easy for crypto traders. Nevertheless, he maintains that there is a healthy interest and participation from local traders, saying, “I think that a lot of people underestimate the trading community in South Africa.” He then added:
“However what we have seen in the last two to three years, because the economy has really been hard hit, the pool is getting smaller and smaller. We simply don’t have spare cash to put into speculative assets. Those that had some of these assets are being forced to sell them just to make ends meet.”
De Sousa is still optimistic that many South Africans are well-informed about cryptocurrencies and that many see the value in trading and investing in cryptocurrency assets — Bitcoin in particular: “The South African crypto trading community is big but the Bitcoin community is much bigger and there are a lot of people that still consider it a very good asset and a store of wealth.”
Going beyond the hype
The issue of education is another major consideration when it comes to the proliferation of cryptocurrency trading. Mistrust and misconception yet prevails around cryptocurrencies and their perceived use as a means to facilitate illicit activities around the world. Binance South Africa country manager Tanya Knowles told Cointelegraph that education is an important factor in growing the use of cryptocurrencies in Africa.
“The biggest thing right now with Binance coming into the country is to ensure there is education around scams that are associated with anything that we do. We have to have a lot of emphasis around security, make sure people are using 2FA and other safety measures. We need to get the basics in place before we open it up and say, go wild and start trading.”
Knowles added that the simplest way for people to become acquainted with cryptocurrencies was to begin trading with small amounts, starting with crypto holders giving non-holders small amounts of crypto as an introduction: “If you give somebody R100 in crypto, they’ll learn a way to either use it or spend it and I think that practical experience is the best way to role it out.”
Michelle Nsanzumuco, Fintech4Good lead for Africa, told Cointelegraph that the cryptocurrency sector is growing in pockets around the continent.
“You’re finding that there are niche pockets and areas of interest and some countries where people are actively using crypto. Places like Zimbabwe, Nigeria and South Africa where there is an active crypto community that is really starting to get engaged in crypto.”
These small sectors of adoption are a positive sign, but Nsanzumuco also stressed that education on the subject needs to be improved to help the cause, as a lot of young people seem to be interested in the sector. She added:
“Speaking to more senior organisations and groups, the perception isn’t always positive — there’s that branding of all the dodgy stuff with crypto. There’s still quite a lot of education that needs to come and with education we will get adoption. Without the education and the no-how, it will be very difficult to remove ourselves from the hype.”
Nevertheless, the fact that Africans have adopted and driven the development and widespread use of mobile payment systems across the continent is a positive sign for the uptake of new technologies and platforms. Nsanzumuco also said:
“If you look at mobile payments, sub-saharan Africa created it. It’s not something that is new to us and I think just based on that, the fact that Africans are familiar with mobile payments might make it a little bit easier to engage with platforms and emerging technologies.”