No one could have known that Bitcoin in just ten years will carve space for thousands of other cryptocurrencies and start a cryptocurrency revolution. 2020 was a really significant year for Bitcoin, as it entered a bull cycle and also positively impacted the price of other cryptocurrencies like ETH, Bitcoin, Litecoin, and Bitcoin Cash. This is one of the reasons why an ever-increasing number of businesses, institutions, individuals are investing in crypto in 2021.
South Africa isn’t an exception to this global trend. In fact, it is one of the leading crypto markets that has had a dramatic rise in cryptocurrency transactions. Here we explore the main reasons why there’s increased popularity of cryptocurrencies in South Africa.
The Appeal of Cryptocurrencies
Cryptocurrencies like Bitcoin are powered by blockchain technology that is fully decentralized, which means it isn’t influenced by any financial institution. In fact, the blockchain network and Bitcoin were developed in response to the global financial crisis in 2008.
Furthermore, it is a useful option for merchants, and freelancers, because on the blockchain network, the transactions are processed in less than 10 minutes with very low fees. This is also a great option for anyone that wants to send or receive money abroad. Otherwise, the international transfer fees for sending money from South Africa via a bank transfer can get pretty high.
Moreover, the personal identity of the users is unknown. Otherwise, there’s complete transparency on the network. Also, the blockchain network is designed in a way that makes hacking the network or altering the date of the records a nearly impossible feat.
Access to Banking Systems
Traditional banking systems aren’t that accessible, especially for people that live in rural areas in Africa. Actually, 32% of South Africans don’t have a bank account. With that in mind, most people had to learn how to use digital payment methods that are available through their mobile devices in order to make purchases online or offline.
Hence, the population is pretty tech-savvy so, it’s easier for them to find a suitable crypto wallet. Also, it’s worth mentioning that crypto wallets come in many forms, and users can get a mobile wallet, desktop, web wallet, or even hardware wallet.
Nowadays, Bitcoin is defined as a safe haven asset, even it is compared to gold and other precious metals. The same can be said for other cryptocurrencies. A lot of people perceive investing in crypto as a means of preserving wealth.
On the other hand, the rise of cryptocurrency transactions was undoubtedly affected by the volatility of the South African Rand along with economic and political conditions. No one can say that cryptocurrencies aren’t volatile assets, but as we mentioned earlier, they function on blockchain technology, which doesn’t rely on nor is controlled by any finical institution.
Although a lot of governments dismissed the potential of cryptocurrencies, today, we are looking at a completely different reality. Governments are looking to regulate cryptocurrencies, and actually, in South Africa, a policy paper regarding crypto assets in April 2020 was published. Other factors that will further popularize the use of cryptocurrencies are, of course, businesses that want to accept crypto payments. So, it’s safe to say that cryptocurrencies are the future of money.