Economists around the globe had predicted that the South African market might face an economic crisis which would lead to a widespread recession. While many within the financial community had questioned this prediction in the past, current market scenarios indicate that South Africa has been already under the firm grip of an economic recession. There are many factors that can be attributed to the eventual downfall of South African markets, with the South African Rand taking a major beating.
Even though South Africa’s market can be classified as an emerging one, a combination of poverty, unemployment and inequality which have plagued the economy for quite some time can be considered as a major catalyst. In addition to this, an increase in the country’s VAT, sugar tax and a hike of fuel prices have severely impacted South African consumers and in turn, the economy.
The present scenarios of Cryptocurrency Usage in South Africa
Because of an absence of widespread banking integration, credit card penetration, currency instability and high remittance charges, the situation in South Africa is certainly not looking favorable. In a country which still deals with widespread poverty, the presence of so many disrupting factors has contributed to the contraction of economic activity in the country, which has led to an economic recession.
Because of this, many people are considering investing in cryptocurrencies, particularly Bitcoin, in order to counter the hold, centralized institutions like the country’s central bank have on their money. Because the cryptocurrency market is highly unregulated and decentralized, it may be the perfect way to eschew from centralized institutions. This has already been experienced in several other recession or inflation affected countries dealing with an economic crisis of their own. For instance, the Kenyan government has developed a Blockchain based cryptocurrency project, aimed at boosting its logistics and transport industry. Also, citizens of Greece have also started mitigating to cryptocurrencies, with the hope that such investments would not be affected by Hyperinflation.
Many South Africans have already turned to cryptocurrency exchanges in the country as a viable solution. Investing in cryptocurrencies, such as Tether, which was pegged to the US Dollar in the past, and others such as Bitcoin, Bitcoin Cash, Litecoin etc. allow citizens to avoid paying exorbitant charges when moving large sums of money to and from other nations.
The Popularity of Bitcoin in South Africa
Ever since the effects of the recession were felt by the general populace, a sudden spike in the searches for Bitcoin from South Africa had been noticed, currently being one of the highest in the world. A March 2018 report found the number of searches for the term “Bitcoin” has skyrocketed from 100,000 to almost 1,000,000 over the last year. This coupled with an increase in peer-to-peer trading volume over exchanges are key indicators that citizens are looking towards Bitcoin as a way out of this economic turmoil.
Thus, interest in Bitcoin and other cryptocurrencies have been growing for some time now in South Africa, mainly due to the ongoing economic turmoil the country is in. As cryptocurrencies provide a viable use case when it comes to remittance and is a decentralized system, consumers are increasing their investments in such cryptocurrencies. From startups to investment schemes, the country is experiencing an emergence of crypto and blockchain based projects of late.
Published by Charlesa Gibson