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South African citizens are trying to carve out their own niche in Bitcoin, both as a store of wealth and as a functioning currency, as the government slowly comes round to cryptocurrency.
South Africa is still an emerging Bitcoin market, but it is growing, as more and more citizens come around it seems the best use of the digital currency is as a store of wealth, especially compared to the failing local currency.
It is estimated that about 100,000 users are utilizing the two local exchanges, Luno and Ice3X. Ice3X founder Gareth Grobler admits that although this figure is tiny, especially in comparison to Asia, it is a positive step for the digital currency in one of the most forward thinking African nations.
Indeed, South Africa is moving with the times as the citizens flock towards these local exchanges to be a part of the Bitcoin boom.
Tech analyst Simon Dingle said: "Luno and other local exchanges are seeing an influx of new users given the recent rise in the price of Bitcoin. It is certainly becoming more popular all over the world and South Africa is no exception."
Luno Marketing officer Werner Van Rooyen said Bitcoin was becoming more mainstream in South Africa. “We see it in many ways‚ not just from our internal metrics - including new customers‚ active users‚ application downloads‚ trading volumes and interest from banks and institutional investors — but also from other places: trading volumes that keep growing; increased merchant adoption; increased understanding by investors‚ regulators and banks; press coverage; and the number of Google searches on Bitcoin.”
Recently, The South African Reserve Bank announced that it would be starting a Bitcoin regulation experiment in a ‘sandbox’ setup through a Blockchain-based solutions provider called BankyMoon.
Predominantly, South African’s are using Bitcoin as a store of worth against the local currency, the Rand, which is constantly suffering inflation.
Political turmoil in South Africa has seen ratings agency downgrade the country to ‘junk status’ in regards to its credit rating. There are constant reports of corruption and infighting at the highest political level all affecting the value of the local currency.
Bitcoin offers South Africans a decentralized form of wealth that, while it may be volatile, is predominantly on an upwards curve.
Van Rooyen added:
"When there is a nosedive in‚ say the exchange rate for the Rand‚ you'll often notice a downtrend in other industries like the stock market or the housing market. Bitcoin has been found as one of the assets with the lowest correlation to other asset classes."
However, while the best use of Bitcoin currently in the country is as a store of wealth, South Africa’s biggest online retailer, Takealot, accepts Bitcoin, as well as Bidorbuy, which functions like eBay. Even the Nelson Mandela Children's Hospital Fund is happy to take donations made in Bitcoin.
Julie-Anne Walsh‚ Chief Marketing Officer at Takealot said: "When we launched the Bitcoin payment option in 2014‚ Takealot was one of the first South African online retailers to allow customers to transact using Bitcoin accounts for just under 0.1 percent of all transactions."
"Whilst this is only a small portion of our overall sales‚ the numbers of Bitcoin transactions have increased year on year since launching the service. Compared to 2016‚ we’ve seen a 170 percent year on year increase in the number of Bitcoin transactions – albeit off a small base‚" said Walsh.
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