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If you have about R3 500, you can buy yourself one bitcoin, the virtual currency that is just not going away. Instead, it seems to be growing, and South Africa is fast catching on.
Last year, the country’s first bitcoin ATM was installed in Kyalami. Last month, the first Bitcoin Africa Conference was held in Cape Town, where part of the focus was on how to grow the currency in South Africa and the rest of the continent.
Simon Dingle, who heads up product development at BitX, South Africa’s only bitcoin exchange, said: “I think Africa is the best market for bitcoin because we are a mobile-first continent in terms of technology adoption and Africans understand mobile money already.
“I also think remittances in Africa are a massive market and bitcoin has a profound role to play in helping Africans move money around the continent more efficiently and without the exorbitant fees charged in the past,” he added.
BitX was founded in February 2013 and is headquartered in Singapore, with a development team in Cape Town and a satellite office in California in the US. The company also has a presence in Indonesia, Malaysia, Namibia, Kenya and Nigeria.
Dingle told City Press interest in the virtual currency was growing.
“We’re seeing meteoric growth in bitcoin. At first, most people who were buying bitcoin via BitX were traders and investors, but recently we’ve seen more people using bitcoin to pay for things online and even at restaurants and other stores that accept the currency,” he said.
Technology companies Dell and Microsoft are two of the biggest companies that accept bitcoin in their online stores.
In South Africa, online stores such as takealot.com now accept bitcoin as payment for goods. And the merchant can then exchange the bitcoin for rands – if they want – through BitX.
It may seem only online companies are accepting bitcoin, but ordinary small businesses are also excited about the currency.
Cape Roof Repair, based in Cape Town, told City Press that, while it was still waiting to receive its first bitcoin as payment, it believed bitcoin was the future of digital payments.
Though the price of one bitcoin may seem a bit expensive to some, Dingle said the price was arrived at in the same way as any commodity – a free market of willing buyers and sellers.
“The average price of bitcoin has been volatile until recently because of hype in the market and a small group of buyers and sellers, but recently we’ve seen the price starting to stabilise, as more people have started using bitcoin and institutional investors have started getting involved.
“Legitimate exchanges launching in the US, along with a futures exchange for bitcoin, have also helped encourage stability in price,” he said.
One of the selling points of bitcoin is that it is decentralised, meaning it works without a central administrator or repository, but this has made regulators nervous. Regulation has already begun in several places, such as Canada, where it is regulated under anti-money laundering and counterterrorist financing laws, and serious discussions around regulation have begun in the UK and the US.
There are several countries that have not embraced bitcoin, including Russia, Thailand and Bangladesh, which have declared virtual currencies illegal.
In South Africa, the Reserve Bank has issued a position paper on the virtual currency; one of its biggest concerns is the potential for financial abuse across jurisdictions in the form of money laundering and terrorism.
“In line with the bank’s position that regulation should follow innovation, the bank continues monitoring developments in this regard and reserves the right to change its position should the landscape warrant regulatory intervention,” it said.
Dingle is optimistic about the regulatory future of bitcoin.
“At the moment, many bitcoin businesses are holding back on offerings because they are waiting for regulation.
“But we have a good relationship with regulators and have been encouraged by our conversations with them,” he added.
