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Bitcoin, the cryptocurrency that promises nearly seamless, low-cost international transfers of funds, a lack of centralised control and anonymity, has been variously called a ponzi scheme, economic curiosity and joke. But its uptake in Africa suggests those dismissing it out of hand may well come to rue their derision.
The greatest challenge Bitcoin faces is getting regular people to use it. Like any currency, Bitcoin is only truly useful if people can invest in it as easily as they can make purchases – and not just digital ones – with it. Thanks to the efforts of a number of South African Bitcoin enthusiasts, both of these hurdles are being addressed.
Like other currencies, Bitcoin can be bought and sold on exchanges, but until recently, doing so was extremely complicated for those outside of developed markets like the US or Europe. Enter BitX, a South African Bitcoin exchange that allows locals to buy and sell the cryptocurrency using South African rands.
BitX started out as a digital wallet service (holders of Bitcoin tend to store their coins in a digital wallet, either online or on physical hardware like a flash disk) but has since expanded its offering to include exchange services for the buying and selling of Bitcoin and merchant services so that businesses can accept Bitcoin.
Recently the company announced that it has taken a further step toward making Bitcoin more useful by partnering with payment gateway services company PayFast. PayFast provides payment facilities for 30 000 South African retailers, and now allows buyers to pay using Bitcoin, while sellers receive payment in rands, insulating them from the cryptocurrencies notorious price fluctuations in the process.
But it’s not just bedroom Bitcoin enthusiasts and startups that have demonstrated interest in the fledgling currency. In February, Standard Bank was rumoured to be considering offering its own Bitcoin-related services (powered by BitX parent company, Switchless), but later reneged on that saying that the pilot was for the bank’s own research purposes and wouldn’t be launched commercially.
BitX isn’t alone in its faith that Bitcoin will find a place in the South African economy. Exchanges like IceCUBED and Bitoin Broker are springing up, along with plenty of sites explaining how South African users can invest in Bitcoin using international exchanges and ever-growing lists of retailers and service providers that accept the crytocurrency – which now includes dating site OkCupid, web hosting and domains company Namecheap, gift card service Gyft (which was recently sold for an estimated US$54 million dollars) and online retailer Takealot.com.
At the same time, a Botswana Bitcoin enthusiast is trying to raise funds for charity using the crytocurrency and a South African musical collective called The Cypherfunks are using the crypto-model as a basis for music creation, distribution and remuneration.
In the US, companies like Robocoin are rolling out Bitcoin ATMs in major cities, bringing the currency a step closer to mainstream adoption. Meanwhile, alternative cryptocurrencies like Litecoin and Dogecoin continue to gain traction among early adopters and the tech-savvy who hope to see them climb in value like Bitcoin did late last year when it peaked at over US$1 000 per coin.
Considering the rise in mobile payment solutions like SnapScan and Flickpay in South Africa, a service that combines the convenience of mobile transacting and Bitcoin can’t be far off. All of which must be making local banks sit up and pay close attention.
There are plenty of good reasons to be sceptical about the future of cryptocurrencies – including trepidation around how governments will respond to them, their current volatility and the current barriers to entry would-be users face – but to dismiss or ignore them entirely is asinine.
Image: BTC Keychain via Flickr.