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I Got Paid In Bitcoin. Now What?

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paid in bitcoin

Bitcoin has proven to be a great liberator that can democratize and simplify the way we make payments and money transactions all over the world. Especially in Africa, it is a key piece of currency/technology that should be harnessed and propagated for the benefits of intra-African trade and a more unified market across the continent. Bitcoin is a great alternative currency devoid of discrimination and biases that Africans regularly experience from international banks, credit card companies as well as international payment providers.

The opportunities bitcoin provides are endless. Bitcoin can be employed to help create an economy and a society that is productive, progressive and provides opportunities for all without biases and unnecessary discrimination.

Low Merchant Adoption Rate of bitcoin in Africa

Bitcoin adoption by merchants in Africa has been slow due to:

Regulation: There is poor regulation in Africa where most countries take long to pass payment legislations and this has a negative impact on the economy of these countries.

Awareness/Misinformation: Bitcoin is not very popular in Africa and for the few who do, don’t know it’s benefits. 

Existing mobile money services: There is already’ M-pesa’ in place which is a mobile money service. It is very reliable and it might take a while before people adopt the whole bitcoin concept.

Cash is (still) king:  The use of credit cards is not very common in Africa as most transactions are done in cash. For this reason, it is hard to train people on online payments but people are slowly adopting.

paid in bitcoinWith the exception of South Africa (who’s regulators hold a very positive stance towards bitcoin), merchant adoption is close to zero in most of Africa. Hence, if you decide to receive payments for good and services you will need to convert your bitcoins into local currency. The good news is, that getting paid in bitcoin and then converting it into local currency can often be cheaper than the exuberant PayPal fees that many freelancers and online merchants have to face.

Converting bitcoin to local currency

If you want to convert bitcoin into local currency, get an exchange of bitcoin that will enable you to sell at a good price and preferably a local currency.

The following are the things to consider when selecting the exchange to use.

  • Does the exchange you have selected support the currency that you want?
  • What is the cost of the exchange?
  • How long does the fund transfer take?
  • Does the selling price make sense?
  • Check if the exchange is legit.

The most popular exchange that Africans use is the peer-to-peer exchange LocalBitcoins.com. In almost every African country, you will find people willing to buy and sell bitcoins using this marketplace. It is one of the leading bitcoin marketplaces in the world and uses a user rating system and escrow accounts to drastically reduce the risk of fraud or scams.

In Kenya, for example, Safaricom’s M-Pesa money transfer service is the most common means of exchanging bitcoin into the local currency via LocalBitcoins.com.

When getting paid in bitcoin makes sense

If you are running an e-commerce business, are a freelancer or are working remotely for an international company, it makes sense to accept payment in bitcoin if:

  1. The cost of converting your bitcoins into your local currency is less than PayPal’s or other online payment systems’ fees.
  2. If you regularly send money abroad and want to reduce remittance costs.
  3. If you believe the value of bitcoin will increase over time and you want to hold it as a long-term investment.

If any of the three before-mentioned reasons resonate with you then you should consider accepting payments in bitcoin.

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South Africa’s Central Bank Categorises Cryptocurrency as “Cyber Tokens”

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South Africa Cyber Tokens

The South African Reserve Bank has made a decision to categorise virtual currencies such as bitcoin as “cyber-tokens” stating that they do not meet the necessary prerequisite to be referred to as money.

While addressing reporters in Pretoria, the Deputy Governor of the Reserve Bank of South Africa, Francois Groepe, said:

“We don’t use the term ‘cryptocurrency’ because it doesn’t meet the requirements of money in the economic sense of the stable means of exchange, a unit of measure and a stable unit of value. We prefer to use the word ‘cyber-token’.”

In addition, the Reserve Bank has now formed a financial technology (fintech) taskforce that will be tasked with reviewing the central bank’s stance on private virtual currencies and help draft a suitable regulatory regime and policy framework.

The decision by South Africa’s central bank comes just two months after the South Africa Revenue Service (SARS), announced their new laws on digital currencies putting them ahead of most African countries that are still struggling to implement laws that govern cryptocurrency use and trading.

Groepe went on to say: “We want to ensure or establish whether there is still compliance with the relevant financial surveillance or exchange-control regulations.”

Not Everyone Loves Cryptocurrencies

Many African governments have been hindering the adoption of cryptocurrencies. Just this week, the Reserve Bank of Zimbabwe banned all cryptocurrency operations in the country forcing Golix – one of the largest cryptocurrency exchange platforms in the country – to take them to court and challenge their directive. Although the ban was lifted by the Harare High Court, it is not yet clear what the next cause of action of the Reserve Bank of Zimbabwe will be.

Zimbabwe is not the only country. The Central Bank of Kenya has also maintained that investing or trading in cryptocurrencies is risky and has continued to warn both local banks and the general public against them. The central bank of Lesotho also told investors earlier in the year that they would not offer any help to anyone in case they lost their money on digital currencies.

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Zimbabwe High Court Suspends Ban on Cryptocurrencies Set by Central Bank

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Zimbabwe Court Suspends Ban on Cryptocurrencies

Zimbabwean digital currency exchange Golix will be able to resume operations after the Harare High Court suspended a ban by the Reserve Bank of Zimbabwe (RBZ) that prohibited cryptocurrency operations in the country.

Zimbabwe’s central bank had barred all financial institutions from providing any services to cryptocurrency exchanges terming their move as a step that is meant to “safeguard the integrity, safety, and soundness of the country’s financial system, and to protect the public in general”.

The ruling was made by the High Court after the Reserve Bank of Zimbabwe failed to appear in court following a case that was filed by Golix challenging the country-wide ban of cryptocurrency trading.

In an interview with CCN, Golix’s Communications Manager, Nhlalwenhle Ngwenya, said: “The ban was lifted.” None of the officials at the Reserve Bank of Zimbabwe, including the Governor, John Mangudya showed up for the proceedings at the Harare High Court causing the court to suspend the ban.

“We are hoping that we can immediately go back to doing business and processing the order book,” stated an official from Golix. As the biggest cryptocurrency exchange in the country, Golix was forced to stop its operations and find ways to deal with the directive from RBZ in a notice that was sent to its members.

Relief to Cryptocurrency Exchange Platforms

The ban lift is a relief to both crypto traders as well as investors who will now be able to trade on the Golix or Styx24 exchange platforms. Besides their crypto trading platform, Golix also owns a bitcoin ATM that is located in Harare.

The RBZ had classified operations by cryptocurrency exchanges as illegal in the country. One of the arguments presented to the high court by Golix was that the ban was unconstitutional citing Section 68 while questioning the authority the central bank had in making laws, a function which is meant for the legislative arm of the government, which the RBZ is not part of.

In a letter issued on May 15 to Golix, the central bank ordered them to cease all their cryptocurrency trading and gave banks a maximum of 60 days to stop any relationships they may have with virtual currency exchange platforms in a circular that had been issued on May 11.

The high court ruling also gave the central bank of Zimbabwe a maximum period of 10 days, within which they can oppose the provisional order. In addition, the RBZ was also ordered to pay the cost of the suit.

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Kidnappers in South Africa Demand Bitcoin Ransom for Teenager, Boy Found Unharmed

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Kidnappers Demand Bitcoin Ransom

In South Africa, a gang has kidnapped a 13-year old teenager and demanded a ransom to be paid in bitcoin for his release. The abductors have demanded a ransom of 15 BTC, which is an equivalent of $120,000 at today’s prices.

“This is a kidnapping! We have your child. Your child will not be harmed if the following demands are met: We demand a ransom of 15 bitcoins to be paid to the below Bitcoin wallet to secure your child’s safe release,” reads the note left by the kidnappers.

According to The South African, 13-year-old Katlego Mariate was kidnapped while playing with two of his friends at his home in Frangipani Street, Tasbetpark Extension 3, Witbank. Witnesses testified the victim was grabbed into a gold Toyota Corolla occupied by three unknown men before driving off.

The Police spokesman, Brigadier Leonard Hlathi, said the situation is being investigated:

“We are investigating a case of kidnapping that happened on Sunday in Witbank. There was a demand that was made that the parents should deposit cash in bitcoins.”

Another police officer said the parents of the victim, who are in deep shock over the incident, do not even know what bitcoin is. “They don’t even know what this bitcoin is. They’re devastated and you can see they’re worried and asking themselves: ‘Where’s our son?”

Boy Found Unharmed

According to Reuters Africa, police spokesman Hlathi informed the public that the boy was found unharmed on May 24.

This appears to be the first case in the country involving a bitcoin ransom in a kidnapping. However, it is not the first time this has happened in other parts of the world. Last year, a bitcoin analyst was kidnapped in Ukraine and, in early 2018, a lawyer was abducted with respective kidnappers demanding bitcoin as ransom in Mexico.

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