by Matthew Davis on May 3, 2019

How South Africa Can Host The Next “Crypto Boom”

South Africa and cryptocurrencies are not what people combine in a sentence very often. Especially not the people not living in the country. For locals, it is a daily occurrence as we’ve been proven through a survey that South African prowess in the Blockchain cannot be debated. The sheer amount of funds gathered in the country in the form of cryptocurrencies is astounding. The fact that regulations are lighter than other crypto hubs also supports growth. But in the wake of new regulatory bills coming up, that could change very fast.

But, no matter the complications that may follow additional rules and laws, South Africa still holds the potential to be the catalyst of the next “Crypto Boom”. The reasons are very simple when one thinks about it:

  1. Large ownership of cryptocurrencies country-wide
  2. Large population able to sustain the popularity
  3. The development of South Africa’s financial segment
  4. The rise in the private equity market

All of these reasons combined spell a melting pot of speculation and advancement in the Blockchain technology. But, no matter how 1 country may try, it will not be possible to do it on their own. South Africa will need the support of their African neighbours, and their fiercest financial competitor in the region, Nigeria.

How Did Cryptocurrencies Become a National Favourite?

The rise of cryptocurrencies is tied to the rise of other financial markets. back when unemployment was a massive issue (it still is actually), people were scrambling to find any type of additional income to support their families. The salaries gained from the already hard-to-acquire jobs were not enough to support all of the dependents. Seeing how only 1 person was employed in a large household, even a prestigious job did not do the trick.

This is where the Forex and stock markets come into play. People started hearing about them more and more often and witnessed locals rise from rags to riches. Sandile Shezi, Ref Wayne and all of the other successful Forex traders inspired the local populace to try their luck in the markets. However, these already sophisticated markets required a large initial investment to have a “livable” profit margin. Therefore, people started looking for alternatives immediately.

Back in 2017, where the first real “Crypto Boom” occurred, not many South Africans were participants of the market. However, the ones that were, saw profits of 100%,200% and even 500%. Most of these participants were tech-savvy young people who saw the potential in the asset.

Seeing their peers achieve such success in a market they’ve never heard of, also inspired the populace to try it out, and it was a perfect alternative to the hard-to-enter traditional financial markets. Long story short, here we are as #1 in the whole world in terms of crypto possession.

How Will a “Crypto Boom” Happen in Africa?

It is important to note that South Africans are not the only ones heavily invested in cryptocurrencies. Nigeria and Ghana are well behind SA in terms of crypto interest. Therefore the continent of Africa is shaping to be one of the best crypto hubs for the future, the only thing required is to convince crypto companies to integrate into the region.

In fact, not too much convincing will need to happen. The survey itself was already enough proof for crypto exchanges and mining companies that Africa can indeed be a lucrative market. Labour is cheaper than pretty much anywhere else. Electricity is also more accessible but still needs development. And the population size of these most interesting countries would indeed prove to be profitable.

We’ve already seen companies withdraw from markets such as the USA, EU and various other Asian countries. The reasons were usually, strict regulations, unfavourable conditions in terms of costs, and the overall fluctuation in the crypto market. For example, Bitmain had to put its plans on expanding in Texas on hold, while waiting for the market to rise again and find alternative locations.

In addition, Binance planning to introduce Margin trading for cryptocurrencies will boost the overall accessibility of the market for various African traders. Making it possible to generate large profits with small deposits are going to draw in more and more customers. In fact, all of the CFD brokers that have been leeching on the crypto market will most likely lose their Crypto CFD trading community to crypto exchanges.

This will drive more demand and supply changes for the assets, and make the market a lot more vibrant. Seeing how millions of Africans participate in various financial markets every single day, it will be a great call to action for the future.

South Africa’s Influence On the Crypto Market

According to the survey, there are around 1.25 million South Africans that possess cryptocurrencies. This, however, does not show how many of them are active traders. But seeing at the development overall, it does indicate that most of these people are HODLers. Should the crypto market show any signs of an upcoming bull rush, South Africans would be able to contribute millions of dollars to the daily trading volume, with other African countries following suit.

Overall, companies that will be able to exclusively service South Africans are sure to find a lucrative market, while the traders themselves will have more incentive to invest and trade their assets. All of this traffic can later be directed towards smaller cryptocurrencies, which can grow the market capitalization by a couple of billion dollars if everything goes smoothly.

In conclusion, South Africa, alongside its successful African neighbours, can be the catalyst of a new “Crypto Boom” in the future, thanks to their contribution of more than a million traders.

By Matthew Davis

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