Cryptocurrencies in South Africa: A Money Revolution?

16 Apr

Cryptocurrencies had a rough beginning in their initial years. The crypto scams of 2018 brought in a lot of reluctance and scare amongst people. However, after Facebook announced the launch of its own crypto coin in 2019, people have started taking cryptocurrencies a lot more seriously. Are you interested in cryptocurrencies? Keep reading for more information about cryptocurrency trading and to know more about the revolution it might trigger!

Race for the crypto market in Africa

60% of the global mobile money pass through payment platforms based in and led by Africa. So, while investment interest in cryptocurrencies has increased, it has been accompanied by a race to capture the crypto market in Africa. Many large establishments have become a part of this which includes, the microblogging giant Twitter. Jack Dorsey, CEO of Twitter has announced his trip to Africa for exploring the crypto opportunities. The Crypto Finance Conference (CFC) was held in St Moritz this year.

Africa has also experienced issues created by crypto fraudsters, causing many Ugandans to lose their money from the OneCoin Ponzi scheme. However, it is important to keep in mind that there are fraudsters in every industry. One should not be blinded by negative impacts only. Cryptocurrencies are undoubtedly taking part in world-leading commercial projects and playing a role in offering brilliant opportunities for development. For example, about 4,400 refugee families in Uganda were given away $650 worth of crypto tokens for free in 2018 by decentralised payment network OmiseGO.

Predictions for 2020

Based on the past results, experts have analysed what can be expected from the crypto market in Africa in 2020. Dawie Roodt, the South African economist and bitcoin enthusiast, states that the hype of the past few years has slowed down, and things became quiet in 2019 on the private side in South Africa. However, it does not mean that South Africans are not interested. On the contrary, the South African Reserve Bank has seen a lot of progress. SARB may even be planning a regulatory sandbox that will allow private sector players to experiment with real ideas and real consumers under regulatory supervision. However, they are very cautious to take big steps in anything concerning cryptos. Roodt also says that the consumers have more power in their hands now due to the failure of the government in Zimbabwe and South Africa.

However, due to the COVID-19 outbreak, the economy has taken a blow and uncertainties are everywhere. So, it is not always wise to rely on predictions. Still, you need to know that digital money is the answer to this pandemic. Several recent determinations have been issued by the SARB that will prevent people from using cryptocurrencies for transferring money out of Africa. Apart from its proposed cryptocurrency sandbox, the SARB is also running Project Khokha to look into the use of decentralised ledger technology (DLT) in interbank settlements.

Global Crypto Hubs

Certain African governments like Seychelles are acting as global crypto hubs. Other examples are Zug in Switzerland, Offshore island states such as Gibraltar, Malta, Caymans and Jersey.

New Options for Consumers

Binance is the largest crypto trading platform in the world with more than a hundred coins. It is now looking to open offices from Cape Town which is great news for South Africans as they are offered the trading of all cryptocurrencies of Binance. This move will also open more choices for customers. The product offerings will no more be limited in cryptocurrencies but also stable coins, security tokens and all types of assets including real estate, gold and diamonds will be considered.

Africa’s view towards cryptocurrencies

Cryptocurrencies had entered the market in Africa as payment instruments. It was misunderstood and was not viewed as currencies. Now, people are showing more interest in not only cryptocurrencies but also digital money insurance. It is now only a matter of time before there are changes in the broad-based financial system.

Only time will tell if the financial system and the global economy will be completely revolutionised by crypto or only some incremental efficiencies will be offered to payment systems.