Today I am going to show you how to use cryptocurrencies the best way in South Africa:
Use Bitcoin to Rand for payments.
Buy and sell bitcoins without having a bank account
Earn money with bitcoins.
Why South Africa?
South Africa holds rank #4 of cryptocurrency owners world wide!
That's why in this extensive bitcoin market guide South Africa I am going to illustrate you the current situation regarding cryptocurrencies.
And how you can benefit of the bitcoin applications personally!
In fact, these are the exact techniques and skills that I used to explore the bitcoin market in Africa and to increase my bitcoin wallet steadily.
Let's dive right in.
Bitcoin to Rand - An Introduction
"The way we handle personal finance is completely outdated. Cryptocurrencies like Bitcoin offer us a real solution to updating money itself." @Lucas_Tesler)
The above cited quote is from Lucas Tesler, Goodbit.
Cryptocurrency and the blockchain are disrupting the economy in South Africa, as more and more people of the population are adopting the digital asset.
Unlike fiat currencies which are bound to regulations and geography, cryptocurrencies are exchanged and used on a decentralized ledger which provides increased transparency and freedom to trade. The explanation of the bitcoin principle illustrates the background of blockchain technology and use cases in Africa.
Although the media coverage of the South African cryptocurrency market does not begin to reflect the accelerated adoption of the coins, the country may soon overtake the largest markets worldwide.
A news platform dedicated to the cryptocurrency market in Africa reveals that South Africa is one of the main Bitcoin countries on the continent.
This development is underligned by the fact that the majority of Bitcoin ATMs is in South Africa.
With countries such as Ghana, Egypt, Nigeria, Uganda and Zimbabwe showing double-digit inflation levels, the cryptocurrency has become an attractive investment opportunity.
Also, the increased interests of mobile telecom operators to develop the infrastructure in African countries due to the growth of mobile users (which will reach around 725 million by 2020), means that a higher percentage of the continent's population will have tools to access the cryptocurrency environment.
Cryptocurrency Situation in South Africa: Market and Players
Main international exchange platforms and asset management companies are starting to look closer at South Africa because of its high potential of becoming a hub for the main cryptocurrencies.
According to Google Trends, searches from South Africa for Bitcoin ranked highest globally. Despite the instant drop of the cryptocurrency's value, international start-ups are entering the South African market to develop cryptocurrency SaaS platforms and local companies are working on providing South African cryptocurrencies.
There's a continuous crypto boom happening in South Africa. Many South Africans are turning to Bitcoin to protect their funds and assets.
The integration of the first multi-coin crypto ATM in South Africa shows that Bitcoin remains at the forefront of investors' interest.
Online exchange platforms such as Luno or Paxful are experiencing high levels of trade because of the ETH to Rand and BTC to Rand pairs offered. You find the actual BTC to Rand price on this Luno chart.
However, South Africans who wish to diversify their crypto portfolio can use platforms such as Coindirect (South Africa) which allows them to sell and buy Bitcoin Cash, Ripple or Litecoin along with other ERC-20 ICO tokens.
South Africa will experience an upgrade of its crypto landscape with the launch of Sygnia's cryptocurrency platform later this year. The company revealed that its platform will provide integrated solutions complementary to the standard crypto buy/sell capability.
Read also the latest blog posts of Haroun Kola!
User Case #1: Convert Bitcoin to Rand
If you receive bitcoins and you wish to sell them, you wish to convert Bitcoin to Rand, the Luno is the appropriate choice for you in South Africa. Luno is the market leader. It supports Bitcoin and Ethereum.
The main advantage of Luno is the simple to understand fee structure and its high market share in South Africa. This makes it easier to find other Luno wallet owners as well.
Which Are the Most Used Cryptocurrencies in South Africa?
The most used cryptocurrency in South Africa is the Bitcoin as communities are using the digital coin to offset the collapse of the rand and protect their assets. The BTC to ZAR rate has been showing a stable market trend which is beneficial to the nation's investors.
According to Jacques Serfontein, CEO of Bitmart.co.za, cryptocurrencies have tremendously increased in popularity in South Africa and because of the local currency's weakening, the digital coin is a great investment option – providing monthly returns of between 6% to 15%. BitMart is an online retail platform developed in South Africa, which provides crypto cloud mining solutions and crypto mining hardware.
Although other cryptocurrencies such as Ethereum are present on the South African Market, communities still prefer Bitcoin. Their affinity for bitcoin-related mining rigs proves that South Africa's adoption of the digital coin has far exceeded other African countries.
Why Are Cryptocurrencies Becoming More And More Popular In South Africa?
Due to the sharp downfall of South Africa's local currency and the freedom in crypto trades, the digital currency has increased in popularity throughout the country.
Despite huge selloffs in emerging markets, the Rand took a massive fall and has maintained a low position throughout the last time which resulted in South Africans shifting their focus towards the Bitcoin. Ranking highest in online searches, the Bitcoin exchange platforms are reaching incredible profits in South Africa.
According to MyBroadband 2018 Cryptocurrency Survey which involved a group of around 1,300 MyBroadband readers from South Africa revealed that South Africans who didn't own cryptocurrencies still planned on buying the digital coins by direct purchase or through exposure to the market sector via investments in cryptocurrency miners.
A quarter of the survey's respondents revealed that they will invest in the digital coin, and about 15% also showed interest in crypto mining, while 7% aim to exclusively invest in crypto mining.
How Does Bitcoin Work
To start trading cryptocurrencies, you must have a crypto wallet and an exchange platform to use for your trades. However, if you're interested in more than just trading, buying or selling, you can invest crypto in different trusts such as GBTC, a crypto IRA, an exchange to exclusively buy coins and store them in a wallet or use a hybrid exchange-broker-wallet such as GDAX/Coinbase which allows clients to sell/buy/ store digital coins.
What is a crypto wallet? It's where you store your digital coins such as you would in a bank account but based on encrypted passwords. What is an exchange? It's like a stock/ currency exchange platform where you can trade cryptocurrencies with traditional currencies like the EUR or USD.
Before trading with crypto you should research and study how crypto exchanges work and decide which one to use.
If you're a beginner, you may find it easier to trade crypto stocks on the stock exchange market so that you don't trade crypto directly but through companies such as GBTC which own Bitcoin or another cryptocurrency and sell the shares.
You should also consider the high volatility of the crypto market where price movements can massively increase or fall sharply in an instant determining massive gains or immense losses. Beginners should start by trading major crypto coins such as ETH (Ethereum) or (Bitcoin) against local currencies. You can move onto trading crypto pairs such as BTC/ETH against fiat currencies. Although this form of trade can be rewarding, it's also very risky.
Which Are the Transaction Partners and Which Are The Procedure Steps
Example with Luno:
To start trading with Luno visit the online website at www.luno.com and follow the instructions to register and claim your promo code. However, if you only want to check the bitcoin price in zar, use the menu on the site and select the charts page which will bring up the market prices.
After filling in your email address & password and confirming your account via the link sent to your inbox, you should return to the Luno website and click Continue.
As a new user, you'll be limited to an R15000 value for total deposits & withdrawals. However, once you've verified your identity you can upgrade to a Level 2 user and enjoy a monthly total limit of R50,000 for deposits & withdrawals. When you reach level 3 you won't be restricted by any limits.
Verifying your account involves submitting an ID and proof of your residence such as your latest bank statement which includes your address.
Next, you should connect the ZAR wallet to your bank account so that you can use local currency for trades. What is the price of 1 bitcoin in ZAR? You can check the online exchange platform's chart. What is the BTC price in USD? Again, Luno provides all the information you need.
To make a deposit click the ZAR wallet button and choose Deposit which will open a menu listing the main banks in South Africa. You can use Luno to check the bitcoin price in zar and determine how many bitcoins you should buy or check the bitcoin to USD ratio.
You can also convert bitcoin to Rand and send the funds back into your bank account. Use the bitcoin to Rand converter provided by the online exchange platform to have a clear outlook of the market.
Paxful also allows users to convert bitcoin to Rand and send their funds back to their bank accounts. Investors can easily access the bitcoin to Rand converter on the homepage of Paxful's online platform to check the value of a bitcoin to Rand.
You can then buy/ sell cryptocurrencies such as Bitcoin or Ethereum against rand or other fiat currencies. When you've mastered the crypto/fiat currency exchange procedure, you can upgrade to trading one crypto coin for another.
And about Paxful:
Paxful is the largest peer-to-peer marketplace for bitcoins in the world. It offers more than 300 ways to pay for bying bitcoins!
User Case #2: Buy and sell bitcoins without having a bank account
Most people told me that buying and selling cryptocurrencies is a nice investment opportunity for wealthy people. But bitcoins represent a huge opportunity to integrate unbanked people in the financial system (financial inclusion).
Paxful allows bitcoin buyers to use gift card codes for the payment. Gift card codes can be easily purchased in many African countries.
So, if you don't have a bank account, but you have the possibility to get a gift card, then the P2P marketplace Paxful is the right choice for you.
Which Is the Legal Framework, Cryptocurrency Regulation in South Africa
Although Bitcoin and other cryptocurrencies aren't recognized by the South African legislation, the South African Revenue Service announced its intentions of developing a taxation framework relating to the crypto market.
The IFWG (Intergovernmental Fintech Working Group), held a workshop in April 2018 which brought together South Africa's regulators and local cryptocurrency businesses.
The IFWG which includes members of the South African National Treasury, the South African Reserve Bank, the Financial Intelligence Centre, and the Financial Sector Conduct Authority aimed to find the best strategies to efficiently regulate the crypto market.
The report released after the workshop included the core matters discussed and the steps which should be taken by local competent bodies.
First, regulators should determine a classification for digital currencies and tokens which can perform several functions and add stability to the 1 bitcoin to rand ratio.
Another issue which was raised was the lack of client authentication that could affect anti-money laundering efforts. Businesses showed interest in educating the population about the crypto market and protecting them against its high volatility.
Regulators also discussed the possibility of integrating cryptocurrencies into the existing legislation rather than creating a new legal framework. The Financial Blockchain Consortium of South Africa reinforced the advantages of implementing blockchain technology which could lead to completely overriding central banking.
Currently, the legal environment in South Africa is very permissive and the crypto market is flourishing throughout the nation.
How Safe Are Cryptocurrencies / Bitcoins?
If they're stored in high-security conditions, cryptocurrencies such as Bitcoin or Ethereum are safe investments.
Otherwise, due to the fully digital nature of these coins, they can be accessed by hackers who can steal them out of your account and use your sensitive financial credentials to their own benefits.
Hackers are responsible for stealing around $1.1 billion worth of cryptocurrencies in 2018 alone, that's why security measures should be at the forefront of any crypto investor/ trader/ owner.
Although the blockchain technology is incredibly secure, the two weak links are the storage keys and the use of the storage keys for transactions performed on exchange platforms. At the beginning of 2018, around 660k wallets were hacked into and emptied from BlackWallet which led to crypto owners incurring immense losses.
Also, if you make the slightest mistake when typing in the 30-digit key when sending cryptocurrencies, you could end up losing funds.
The best way to store your cryptocurrencies is by using a hardware device such as the physical crypto wallet. They are highly secure and have their own password. You can also opt for an online crypto wallet at one of the top storage services if you keep your password away from the prying eyes of hackers.
Outlook About the South African Bitcoin Market
Economic uncertainty currently rules South Africa. The land reform to be implemented by the 2018 inaugurated president Cyril Ramaphosa who promised to change the constitution so that land belonging to white people can be taken without compensation and given to black people who don't own any property has raised the distress of financial research companies such as Moody's and Goldman Sachs.
However, the President reassures that the land reform will not affect the economy of South Africa in any way.
The high rate of unemployment and liquidity crisis also adds to the issues the nation is facing. It's why more and more South Africans consider Bitcoin and the cryptocurrency market a haven.
eToro's analysts showed that the number of new South African traders using eToro for bitcoin to Rand conversions and vice versa has risen by an incredible 671% from January to November 2017 compared to the previous year, reaching an overall growth of around 574%.
LocalBitcoins platform shows the same ascending trend in Bitcoin trading. During the first week of March 2018 over 20 mil ZAR (or $1.7 mil) worth of Bitcoin has been traded on LocalBitcoins.
Which Are the Leading South African Bitcoin Companies
These cryptocurrency exchange Luno allow deposits from local bank accounts and after funds are cleared, users can buy and trade Bitcoins and Ethereum. As being founded by a South African Luno has become the market leader for bitcoins in South Africa.
This means for Luno wallet owners that there is always a good probability that your counterpart has a Luno wallet as well, which means no transaction fees.
The next company to consider in South Africa is IceCubed. It’s a South African cryptocurrency trading platform. IceCubed is the place to go if you want to buy and sell bitcoins respectively cryptocurrencies for trading purposes.
If you want to earn money with cryptocurrencies by getting a margin on each trade, the simple and transparent fee structure is in your favour.
Coindirect needs to be mentioned as well. It’s a cryptocurrency exchange platform and a crypto wallet provider. The big advantage of Coindirect is that if offers many different cryptocurrencies, not just Bitcoin or Ethereum.
The headquarter of Coindirect is on the Isle of Man, but the company has a strong focus and a well established subsidiary in South Africa.
A real global cryptocurrency leader is Paxful. The US based company is a peer-to-peer (P2P) marketplace. The unique advantage of Paxful are more than 300 possibilities of cashing in, of payment methods for depositing FIAT money in your account.
Especially buying bitcoins with gift card codes is very popular in Africa, because you don’t need a bank account for that transaction. A perfect match for unbanked people to re-enter the financial cycles.
All these platform and marketplaces provide calculators which allow you to determine the price of 1 bitcoin to rand or bitcoin to USD.
To store their bitcoins, South Africans can also use the Mycelium wallet. If you want to check the bitcoin value in rands, you should just access any of the two platforms and view the price charts. How much is 1 Bitcoin in ZAR? You can check any of the South African exchange platforms and find out the price.
Another South African emerging trading platform is Bitfund which offers access to around 20 of the main cryptocurrencies worldwide.
Why Could Cryptocurrencies Like Bitcoin Be A Good Solution for South Africa
Considering the economic, financial and political instability of South Africa, investors and individuals can protect their assets by diversifying their investment portfolio.
Due to its fully digital nature and increased encryption level, Bitcoin represents one of the best solutions for South Africans to mitigate losses and to carry out transactions. About 1,000 retailers already accept Bitcoin payments in South Africa and the numbers continue to grow proportionally with the increase of mobile users in the region.
User Case #3: Earn money with bitcoins
One of the most asked question regarding bitcoins is: how can I earn money with bitcoins?
Well, there can be trading opportunities, but that's not my field. Me, I like personally the Paxful affiliate program to earn money with bitcoins.
The big advantage is that this is a multi step program, consisting of Tier 1 affiliates and Tier 2 affiliates.
This means: You apply to the program. You convince your friends to join, too. These are your Tier 1 affiliates. Your friends convince their friends as well to join. These are your Tier 2 affiliates. And you earn money of both categories! Tier 1 and Tier 2!
Just do it!
Cryptocurrency expert quotes: Why Bitcoins in South Africa?
The CultureMesh organization is a social platform composed of diaspora networks for which I have been exploring the implementation of a digital currency airdropped directly to diaspora communities. That effort is still in infancy.
Another organization, for which I am a board member, is Hedge for Humanity, which releases a tokenized basic income to everyone on earth via its token, Manna, and was the first digital currency group to provide decentralized identity to an entire village in Uganda and provide them with a weekly basic income via the blockchain. The organization has since evolved to request donations of company stock from established and growing companies as well, through which the organization will redistribute the dividends throughout society. This organization, headed by Eric Stetson, likewise has the potential to remake Africa into a place of hope and financial equity.
When I teach people about bitcoin in the US, many people struggle to understand why they would need to use it. I explain to them that there are approximately 180 currencies throughout the world, and we have the privilege of being at the top of the list with the USD. As you go down the list, the strength and reliability of the majority of currencies drop off significantly. We have to view the power of bitcoin through the eyes of people around the world.
People in countries like Venezuela, Argentina, and Zimbabwe understand fully how a currency like bitcoin can be used as an alternative to their local fiat currencies. There are many other countries in the middle where there is not rampant corruption, massive printing of currency and runaway inflation. In those countries, bitcoin can still be a hedge against currency movements based on major world financial issues, or even as a way to protect yourself from the surveillance state.
I’m encouraged to see South Africa near the top of the list of cryptocurrency adoption. Users in South Africa may choose to adopt bitcoin for one or more of the above-mentioned reasons. The beauty of bitcoin is that it can be used for whatever reason you choose, or for no reason at all other than preference. As more vendors accept bitcoin, it becomes easier to use locally. As a global payment method to send money to others around the world, it provides a faster, less expensive alternative to the banks and money transfer services.
There is no doubt that emerging markets such as South Africa are continuing to develop significant value and services which are redefining global financial systems. This is critically need to enable both the banked and unbanked to retain and transfer value.
South Africa has a thriving economy and yet a diverse range of financial needs to service its entire nation. It is likely that these emerging market countries will become hubs which redefine our global financial infrastructure as their need for innovation remains higher than developed nations.
This will most certainly lead to opportunities for many to create jobs, to empower individuals, and to create a more robust economic environment.
Until now Africa is still a virgin market for cryptocurrencies. South Africa is one of the hottest spots for cryptocurrencies, especially after Luno, one of the leading exchanges, recently reported that they have processed more than 5 million a day last August. The next race between exchanges will be in Africa, which made us at BelcoBTM see the potential of introducing our Bitcoin ATM services in this lucrative market.
South Africa is now lacking behind countries like Seychelles for blockchain adoption in the African continent. However, this doesn't mean that the country cannot take a central role to be a leader in the blockchain space. With negative interest rate, devaluation of currencies and this general insecurity in the financial market. Something with high volatility such as BTC becomes much closer to the people. Adoption, however, is something difficult to achieve as an entire ecosystem needs to be built around it. As regulation is now quite strong around BTC, and local platforms can help both with KYC/AML requirements and with tax reports. It comes down to shops, websites, and in general the businesses to accept payments and therefore usage of BTC. If the ecosystem allows the use of BTC not just as a speculation vehicle, but as well as a commodity, a country can for sure, gets a central role in the global blockchain game.
eneral the businesses to accept payments and therefore usage of BTC. If the ecosystem allows the use of BTC not just as a speculation vehicle, but as well as a commodity, a country can for sure, gets a central role in the global blockchain game.'
Cryptocurrency is going to change the way South Africans use and transfer money. This is going to be at the highest level through cellular carriers, right down to friends splitting the tab for dinner.
The South African government has shown great support for blockchain technology and the use of cryptocurrency seemingly at its core. This will not only drive innovation, but the mainstream mass adoption of the currency(s) of the future.
Because cryptocurrency, in it's purest form, doesn't have a national identity there is a real chance that the increased adopt of such currency will but African countries on equal footing with international counterparts that traditionally have much wider circulation of their currencies.
Removing governments and human whims from the currency markets, as cryptocurrency promises, may lead to African based companies having the ability to compete more directly in the world markets. The potential for lower inflation and more stability could mean the ability to be a bigger player in world markets for African firms.
Cryptocurrencies and the underlying technology have the potential to disrupt and reform the financial systems for both the banked and unbanked around the world. As South African has both banked and unbanked populations, cryptocurrencies could solve the problems of access, inefficiency and expensive middlemen in a number of areas from cross border remittances to currency hedging.
However, I would caution people to be understand the crypto space and be vigilant about finding a trusted partner to avoid scams and corruption.
Multiple factors will come into play into market such as South Africa being able to truly benefit from cryptocurrencies being a larger and more formal part of the economy. One of them, a particular one we specialize in is how will the state and the companies within the country approach anti money laundering regulation and compliance. One of the many reason countries such as South Africa or other large economies on the continent such as Nigeria experience difficulty for its average citizens to interact with the global financial system is due to regulatory risk.
Either direction it goes, if the SA state creates good standards and processes for such aspects crypto will thrive, and then on the other hand when the state is falling such as in Venezuela then crypto tends to thrive as well. But for it to be a true economic strength and power it has to interact with the global and traditional market globally, and that will take having a good AML framework as well as solutions to follow through on it as we’ve shown with industry leaders around the world.
Bitcoin to Rand - Wrapping It Up
As one of the main economic centres on the continent, South Africa currently leads the path in terms of crypto adoption and blockchain technology development. Because of the unbalanced political and financial climate of the nation, investors and private individuals are looking for the best ways to secure and safeguard their assets.
What could be safer than investing in cryptocurrencies? Check the bitcoin value in rands or the BTC price in USD and start trading.