The growth of bitcoin in South Africa is gaining in popularity as enthusiasts of the digital currency trading it reaches 100,000.
In a report from Business Live, tech analyst Simon Dingle said that Luno – which is one digital currency exchange in South Africa – and other exchanges have witnessed an increase in the number of new users trading bitcoin.
It is certainly becoming more popular all over the world and SA is no exception.
The other digital currency exchange in South Africa is Ice3X. Gareth Grobler, founder of Ice3X, says that while the cryptocurrency market was relatively small compared to Asia, he estimates that around 100,000 people in South Africa could be trading it.
Werner van Rooyen, Luno marketing officer, said that as bitcoin was becoming more mainstream in South Africa it’s network effects are very important.
It’s a bit like e-mail: it gets more valuable with each additional person who uses it. E-mail isn’t very useful if you’re the only one with an e-mail address‚ but soon‚ through network effects‚ if there’s a critical number of people using e-mail (or bitcoin)‚ it makes it easier and more valuable for everyone else.
Even though bitcoin is being used for day-to-day purchases such as paying bills and buying clothes, its mainly employed as a store of wealth.
Van Rooyen adds that due to bitcoin’s strong performance against other currencies, such as the South African rand, it has seen a number of investors using it.
When there is a nosedive in‚ say, the exchange rate‚ you’ll often notice a downtrend in other industries like the stock market or the housing market. Bitcoin has been found to be one of the assets with the lowest correlation to other asset classes.
Last August, it was reported that South Africa’s Reserve Bank (SARB) was open to the innovation of digital currencies and the blockchain.
However, even though a joint advisory was released in 2014 warning people of the risks of digital currencies that doesn’t seem to have put people off of it.
As a result, one tech lawyer thinks that bitcoin regulation in South Africa will occur as authorities adopt the approach taken in other jurisdictions as they explore regulatory regimes.
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Last modified: May 21, 2020 9:39 AM UTC