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A Blessing and a Curse: Cryptocurrency Opens Doors to Both Investments and Scams in SA

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Investments and Scams in SA

Over the past year or so, cryptocurrencies have certainly made their mark across the globe. From the spread of information to the introduction of various rules and regulations, country after country appear to be building up their own ideas on just how to handle the cryptocurrencies gracing the world today. South Africa is certainly no exception. More and more businesses within the region are starting to accept cryptocurrencies and as mass adoption seems to become more and more likely, crypto enthusiasts are starting to rejoice at the thought that SA could soon be a region ready to utilise these currencies to their fullest.

However, with all good things come the bad and for cryptocurrencies, that means scams. Here, we’re taking a look just what cryptocurrency adoption could mean for South Africa.

Cryptocurrency Capital

For those living in South Africa, the cryptocurrency revolution has certainly been leaving its mark. Most surprisingly, perhaps, is the simple fact that it isn’t just financial experts that are taking an interest in these coins here. In fact, everyday use of these digital assets has been rife.

South Africa has been following cryptocurrency adoption for quite some time now and as a result, more and more businesses are beginning to boom with improved access to funds that might otherwise not have been available in fiat form. A huge variety of businesses have been picking up on this trend. Online banking, trading, gambling, sports betting and even physical stores are capitalising on these trends. In fact, sportsbooks were some of the very first companies to start to accept bitcoin, some opting for even bitcoin-exclusive payment options, and even schools are now accepting crypto to help the fulfillment of education gaps. With tourism and South African trade also benefiting from the spread of crypto, South Africa has truly been capitalising on cryptocurrencies in a way that no other country in the world has dared try.

For this reason, it’s clear that the interest in cryptocurrency use goes far beyond the experts and instead, often emanates from the residents. As a result, the South African Treasury introduced taxation on cryptocurrency funds as a new, yet traditional form of bringing in capital for the country. From April 2018, it was made clear that any profits made by cryptocurrencies for companies and businesses operating in South Africa would have to come under taxable law and the South African Revenue Service (SARS) had even offered to provide support and advice to those who weren’t clear on what this would entail.

In July 2018, however, amendments were proposed via the Taxation Laws Amendment Bill (TLAB) that would change the definition that digital assets were taxable financial instruments. They would become a financial instrument by the Income Tax Act standards and a financial service by the VAT Act standards, meaning that all crypto trades would then be exempt from VAT. These proposals, should they be successful, could encourage more and more businesses to pick up cryptocurrencies as a form of payment and further integrate these digital coins into everyday life in SA.

South African Scams

south africaHowever, while things seem to be going well, for the most part, there are of course negatives to take into consideration and unfortunately, those negatives are manifesting themselves in scams. The introduction of SAFCOIN – a cryptocurrency designed entirely to bring more and more South African’s safely into the world of crypto – has led to a high volume of investors and spenders entering the markets which, for hackers and scammers, is a new found gold mine.

One of the most recent and perhaps more terrifying scams for a low of Africans is the Nigerian Bitcoin Scam in April 2018. This scam saw thousands of people lose their entire life savings in some cases after a bitcoin trading company disappeared with practically billions of Naira. With both offices in Kenya and Nigeria both seemingly disappearing overnight, people were left confused, poor and scammed. March also saw a cryptocurrency scam, with around 28,000 virtual currency investors falling victim to BTC Global’s theft of over $80 million worth of cryptocurrencies.

These scams have opened up SA’s eyes to the potential risks associated with cryptocurrencies, though the debate is still rife as to whether this will actually make a difference as to how quickly and how eagerly they are adopting virtual currencies within the region. With further education and awareness, this could potentially become much safer but only time will truly tell.

What Do The Experts Think?

While Africa isn’t often thought to be at the forefront of any technological innovations, cryptocurrencies could be the market to change that – at least according to Rakesh Sharma, a business and technology journalist. Claiming that Africa could be the next leading frontier for cryptocurrencies, he said that SA “may be set to steal a march over other markets” namely due to the fact that Africa is suffering from such high inflation of their usual fiat currency. With an unstable economy, more and more people are likely to reach for a decentralised alternative to ensure that their funds are kept safe from the potential of corruption or disaster from central banks.

CEO of Liquid Crypto-Money, an SA cryptocurrency consulting firm, also predicted that Africa is likely to have government-issued cryptocurrencies in the near future. As a potential solution for governments seeking an answer to catastrophic inflation rates, cryptocurrencies aren’t to be ignored but with debate still suggesting that cryptocurrencies in Africa are dependent on speculation and an uncontrollable volatility, it’s difficult to determine just where things could go in the future.

As with most cryptocurrency markets, it’s undeniably complicated to determine whether or not South Africa could really be the country to adopt cryptocurrencies on a mass and stable scale. The potential they could hold, however, is promising enough for most and with government support and treasury regulation, the potential risks could, in time, be reduced.

Bitcoin

Online Retailer Newegg Now Accepts Bitcoin in Kenya, Nigeria, South Africa, Tanzania, and Uganda

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Bitcoin Accepted

Online retailer Newegg has expanded its bitcoin acceptance to 73 countries, including Kenya, Nigeria, South Africa, Tanzania, and Uganda.

Newegg and BitPay Partnership

NeweggNewegg has been collaborating with BitPay since 2014 to facilitate bitcoin payments in the US and Canada. “Since this initial implementation, not a single chargeback has been required for any bitcoin transaction on Newegg. The companies now build on this successful collaboration by extending the bitcoin payment option to the 73 new countries announced today,” an official statement said.

BitPay processes bitcoin transactions worth more than $1 billion yearly for its e-commerce partners. The bitcoin payments company uses blockchain technology to offer transparent transactions and to eliminate chargebacks. BitPay also “enables Newegg to increase its margin on each bitcoin transaction by avoiding credit card fees typically assessed on credit card purchases.”

Anthony Chow, Newegg’s president global sales, said: “Five years ago, we were one of the first major online shopping destinations to accept Bitcoin, and our early-adopter customers were quick to embrace this new payment option. Broadening the ability to pay with bitcoin to the majority of our global network underscores our commitment to bring innovation to the online shopping experience, and answers customers’ growing preference for our bitcoin payment option.”

Newegg sells products such as electronics, gaming equipment, and smart home appliances to over 38 million registered users in North America, Latin America, the Middle East, Europe, and the Asia Pacific.

Buying Products with Bitcoin

Buying items on Newegg with bitcoin is simple. Like with other online shopping processes, you add your items to a cart and select the shipping address of your choice. Once you do this, you proceed to choose bitcoin as the payment option of your choice, review your order, and then pay using BTC. Newegg allows users to pay using computer-based, web-based, or smartphone-based digital wallets.

While South African payments service PayFast recently dropped bitcoin, Newegg is extending this payment option to more people across the globe, highlighting the benefit of using a borderless, decentralised digital currency to shop online.

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How Popular is Bitcoin Gambling in South Africa?

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Bitcoin Gambling in South Africa

Ever since bitcoin launched in 2009, it has had a tremendous impact on many different industries, including online gambling. Having a reliable and secure payment method is imperative in order to have a worthwhile gambling experience, no matter which forms of betting you subscribe to.

When online gambling websites began accepting bitcoin, players all over the world had the ability to make quick and easy payments, while also maintaining privacy. In a sense, bitcoin (and the cryptocurrencies that followed) started a revolution in the online payment sphere and its impact has been felt all over the world.

One country that has significantly enjoyed the benefits of bitcoin is South Africa. South African gamblers are becoming ever more fond of cryptocurrencies and bitcoin ranks among the most-used.

Bitcoin’s Popularity in South Africa

Before we can explore the prominence of bitcoin gambling, we first have to take a look at how well cryptocurrencies are received in the country.

While bitcoin is popular all over the world, it is especially liked in developing countries. Nowhere is the previous statement more true than in South Africa. In a recent study, researchers found that bitcoin ownership in South Africa exceeds the world average by two times. It is estimated that 5.5 percent of the global population owns cryptocurrency, while in South Africa 10.7 percent hold a crypto balance. In the previous year, crypto transfers have increased by 25 percent in South Africa in a trend that seems to have swept over the entire continent.

This Calvin Ayre opinion shows that the transactions are used for both financial and recreational purposes, meaning that cryptocurrencies including bitcoin are becoming a part of everyday life. As one can imagine, recreation can also cover online gambling and there is a rising number of people using bitcoin to place bets on their favorite casino games or sporting events.

The Dark Side of Bitcoin Gambling in South Africa

bitcoin gambling in South AfricaCryptocurrencies are becoming increasingly more popular in South Africa. However, one thing that many overlook is that bitcoin and altcoins are not regulated by any government authority. Effectively, bitcoin is not recognised as a legitimate and official transaction solution. So how does this affect the online gambling scene?

Аnother article about bitcoin for gaming shows that crypto gambling in South Africa is illegal due to lack of regulations from the appropriate authorities. Any South African players engaging in bitcoin gambling is doing so at their own risk and no government institution can step in to assist them in case of fraud. That is not to say that all gambling operations accepting bitcoin from South Africans are fraudulent, but there are no fail-safes and no measures in place to protect users.

So far, the South African government has been slow in implementing some if any regulations to ensure the rights of online players and the safety of any crypto enthusiasts.

Of course, this does not even begin to tackle the problem of regulating bitcoin and cryptocurrencies in general. The added anonymity features and the lack of centralised supervision make crypto hard to regulate.

Moreover, identifying the owner of a wallet is downright impossible without cooperation from other parties. This does not account for the fact that crypto users are developing additional measures to protect their anonymity when using their currency of choice, e.g. hardware wallets or dispersing their funds across multiple wallets.

Future of Bitcoin Gambling in South Africa

It is clear that the South African gambling scene is ripe for further implementation of bitcoin and blockchain technology. However, slow actions on the government’s side will likely stall any potential progress and leave all bitcoin gambling operations in a legal gray area, at best.

Unless regulators take a more proactive approach, it is unlikely that any significant developments will be made in the near future, putting thousands of gamblers at risk.

Naturally, placing the safety of its citizens should be the South African government’s first priority and ensuring that no fraudulent operation remains active for long.

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South African Online Payments Processor PayFast Drops Bitcoin

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PayFast Drops Bitcoin

South African online payment gateway PayFast will cease supporting bitcoin payments from July 20, 2019, due to high transaction fees and long confirmation times. The company expressed its frustrations through an announcement on its website.

Bitcoin’s Current Limitations

PayFastAlthough digital currency is meant to make online transactions cheaper, faster, and convenient, PayFast observed that bitcoin’s current limitations have made it difficult for the company to offer it as an alternative to traditional payment methods.

“Unfortunately, there are a number of limitations and design flaws unique to Bitcoin that make it an impractical substitute for cash, including high transaction fees and long confirmation times for buyers. We have tried various ways to mitigate these problems, but unfortunately, these issues are fundamental. The resultant poor user experience has led us to re-evaluate Bitcoin as a payment method on our platform and a decision has been taken to discontinue support for Bitcoin from midnight 20 July 2019,” PayFast explained.

The PayFast platform has a ten-minute window for the confirmation of bitcoin payments. However, the Bitcoin network has failed, in most cases, to confirm payments within this time period resulting in unsuccessful transactions. The Bitcoin network can currently not handle the volume of transactions it gets at a faster speed, PayFast noted.

Luno has been enabling bitcoin payments on the PayFast platform by acting as an intermediary. “To eliminate any risk posed by bitcoin’s price volatility, Luno locked the bitcoin to ZAR exchange rate for a ten-minute window. If the transaction was not sufficiently confirmed within ten minutes, the payment was unsuccessful and a refund would be due,” PayFast said.

The Bitcoin network can only handle seven transactions per second compared to VISA’s 24,000. This limits bitcoin’s usefulness as a means of exchange and an asset. Moreover, users making payments using bitcoin risk incurring non-refundable processing fees when the transaction fails.

Despite these challenges, the Lightning Network promises to improve bitcoin transactions by making them instant, low-cost, scalable, and acceptable across different platforms.

PayFast Remains Open to Cryptocurrency

PayFast hopes that as this space continues to grow, cryptocurrencies will be able to handle faster payments.

“We are eagerly following the developments of cryptocurrencies and the supporting technologies that are aiming to enable faster payments. As soon as these become workable alternatives, we look forward to supporting cryptocurrencies as a payment method in the future,” the South African company stated. 

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