bitcoin07

There’s a lot of chatter about Bitcoin in South Africa doing the rounds on and off the internet. The digital currency is fast gaining the attention of tech hobbyists and professionals, the media and, yes, financial regulators too. But the real question is whether there is a future for Bitcoin in South Africa.

Here are a few fun facts:

  • the South African rand (ZAR) is the tenth most used currency to buy Bitcoin. While this may seem impressive, keep in mind that it accounts for only 0.06% of all transactions.
  • The digital currency is currently traded on two South African exchanges: Luno and Ice3X.
  • At the present moment, there could be up to 100 000 people trading Bitcoin in South Africa.

Is Bitcoin legal in South Africa?

Yes, although the South African Reserve Bank (SARB) does not consider Bitcoin or any other cryptocurrency as legal tender. In everyday parlance, legal tender is basically limited to paper notes and coins, or their electronic equivalents. But that doesn’t mean the wheels aren’t turning, or that there’s no future for a decentralised currency in South Africa. In July, SARB confirmed that it was investigating possibly regulating Bitcoin in South Africa. Bankymoon, a blockchain-based solutions provider, had been selected as the first experimental business to trial-run proposed new regulations. Whether it’s a good idea to have a digital currency like Bitcoin regulated is, and will be, up for discussion in the years to come.

Experts do, however, seem to agree on how the South African Revenue Service is likely to approach the matter: Until specified otherwise, Bitcoin is seen as an asset. Where bitcoins are used to transact, the transaction itself will be viewed as a barter transaction, in which VAT should be considered. Nevertheless, there are a number of South African businesses that accept Bitcoin as payment for products or services at present. These include Takealot, bidorbuy, and the Nelson Mandela Children's Hospital Fund, among others .As an interesting aside, it’s worth noting that online payment gateway PayFast is used by some of these businesses to accept Bitcoin as a form of payment. Using realtime currency conversion, the Bitcoin amount is converted into rand, with the correct rand amount then being paid to the seller. The peer-to-peer payment system does not apply in this case.

So what does this spell out for Bitcoin in South Africa?

For the time being it does seem that Bitcoin stands a chance on South African shores. While fluctuating too much to be seen as a credible currency for widespread payment for goods and services, it does provide great speculative potential – if you happen to have R100k, or if you have the hardware to make Bitcoin mining a viable possibility. On the other hand, the local success of the cryptocurrency will depend very much on adoption. There may well be up to 100 000 individuals trading and transacting with Bitcoin in South Africa, but this in itself could position the digital currency as a means for gaining greater wealth as being accessible only by those who can afford it. Those who don’t have the financial or technological means will never gain access to the potential the digital currency offers. Given the current political climate, that’s a loaded political gun which is likely to fire as Bitcoin gains traction.Finally, there’s also the position which could render the above arguments moot: Bitcoin is a true digital currency that transcends geographical borders, which simply means that unless regulators come out in force against digital currencies and cough up some serious dough to enforce their regulations, nothing much will really change. As such, the future of Bitcoin in South Africa is likely to remain the way it stands now.

Rising interest signals profitable Bitcoin trading

Since the start of this year, has gained 546% in value. If you’re planning to trade in Bitcoin, this should point to the fact that, historically at least, drops signal an opportune moment to invest in the digital currency. After all, while China and South Korea may have clamped down on the currency, investor interest continues to rise.

In China, some investors are willing to pay a premium of more than $6 000 for a single bitcoin, and demand in South Korea has never been higher. With Japan recognising Bitcoin as legal tender earlier this year, it could well be that the rise of Bitcoin is still in its infancy.

Another factor which could result in increased trading in Bitcoin and other cryptocurrencies is its adoption into formal sectors. The financial services industry seems to be leading the charge, with Switzerland’s financial regulation authority approving a product from Falcon Bank which will allow the bank’s clients to trade in Bitcoin. US-based Goldman Sachs is reportedly considering the same.At the time of this writing, Bitcoin’s price has already recovered to $5 413.44 – barely 24 hours after its 7% drop.

But when all is said and done, trading in Bitcoin still requires the caution, wisdom, and careful study one would associate with any other speculative asset. Plan wisely, execute decisively.