SA bitcoin prices surge as rand weakens

2016-10-11 17:22 - Kyle Venktess, Fin24
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Mike Caldwell, a 35-year-old software engineer, holds a 25 Bitcoin token at his shop. (Rick Bowmer, AP, file)

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Johannesburg - Bitcoin prices on a local exchange are on the rise as the rand reacts to a National Prosecuting Authority (NPA) decision to charge Finance Minister Pravin Gordhan.

National Prosecuting Authority (NPA) head Shaun Abrahams announced on Tuesday that Gordhan had been ordered to appear before court on a charge related to the early retirement of former deputy commissioner Ivan Pillay. Gordhan is expected to appear in court on November 2.

The summons comes after Gordhan was instructed to report to the Hawks in August regarding investigations into the Sars rogue unit.

By late afternoon the rand was 3.43% lower at R14.27 to the dollar.

At midnight, the price of one bitcoin stood at R 8 891 on SA-linked exchange BitX but by Tuesday at 14:00 the price had surged to R9 298.

READ: Dawie Roodt on why the rand won't tank to R20/$

While many who had purchased bitcoin prior to the announcement, might see a slight return on their ‘investment’, South African experts say buying bitcoin as a form of saving is “pure gambling”.

Internet analyst Arthur Goldstuck said that the bitcoin currency fluctuated heavily and that bitcoin price was also directly impacted by the exchange rate as bitcoin is purchased in US dollars. 

“Of course after the announcement that the Finance Minister would be charged the dollar exchange rate was impacted, but bitcoin is very volatile, with its value fluctuating,” Goldstuck told Fin24. 

READ: Bitcoin price surges to two-year high

The price of bitcoin for South Africans surged as it was announced that Finance Minister Pravin Gordhan was ordered to appear before court on a charge of fraud over the Sars spy unit.

“There are very few reasons to trade in bitcoin, one of the main reasons is for secure online payments,” Goldstuck added. 

“However, buying bitcoin as a means of saving is not a good idea. Bitcoin might seem attractive, but one cannot say categorically that it is because the value of bitcoin is highly speculated,” he said.

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