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South Africa leads forex trading in the African continent, but with increasing bitcoin popularity, we see a gradual shift from forex to bitcoin trading in South Africa.
Will bitcoin trading become more popular than forex trading in South Africa? This post focuses on the reasons bitcoin trading is becoming more popular than Forex trading.
Why Is Bitcoin Trading Becoming More Popular In South Africa?
Cryptocurrency boom driving Bitcoin trading in Africa
In April 2021, Bitcoin hit an all-time high of $62,000, surpassing the 2017 cryptocurrency boom, which saw bitcoin trading at $20,000 at the close of the year. Knowing that bitcoin trading is here to stay, many MetaTrader 4 forex brokers in South Africa also started featuring Bitcoin and other cryptocurrencies on the popular platform that in the past functioned predominantly for forex trading.
Round-the-clock trading
Since Bitcoin trading takes place over the blockchain network with no middlemen controlling trading activities, Bitcoin trading becomes a continuous 24/7 affair with no break making it preferable to forex's 24/5 trading time. This explains the astronomical jump in cryptocurrency prices starting from Friday night which marks the close of the forex market.
Government regulations on cryptocurrencies
South Africa’s Apex bank is looking to encourage bitcoin and altcoins trading and yet to place any major law or regulations affecting cryptocurrency trading negatively. However, the Apex bank has tax regulations, anti-Money Laundering (AML), and Know Your Customer (KYC) protocols to guide against illegal use of bitcoin.
Easy access to Bitcoin trading
Unlike forex trading, Bitcoin can be traded peer-to-peer without requiring that traders have a trading account with a specific capital limit. Compared with forex trading, Bitcoin is more accessible; thus boosting peer-to-peer bitcoin trading, which can serve various purposes, especially relating to payment for goods and services.
Cheaper and faster bitcoin transactions
Asides from easy accessibility to bitcoin, the bureaucracy associated with cross-border FIAT money transfers and the charges associated with it has driven the South African populace to seek alternative means of effecting cross-border payments.
For such purposes, bitcoin becomes preferable due to its peer-to-peer characteristics, which makes it easy to send and receive bitcoin to or from persons, businesses, or organizations worldwide without the need to change Rand to USD, fulfill bureaucratic processes, or pay expensive charges. This factor drives Bitcoin trading over forex due to its faster transaction processing time and cheaper transaction cost.
High Rand volatility ratio
The recent downward trend of the Rand and its high instability against major world currencies is a major cause of concern for South African investors. As of March 2020, the Rand reached its highest volatility, driving more investors to seek safety in bitcoin as a means of protecting their wealth against Rand's possible downward trend due to increased volatility; hence, the increased Bitcoin trading over forex trading.
A preferable store of wealth
Bitcoin was created in 2009 with anti-inflationary mechanisms that make it immune to fiat currencies inflationary challenges, thus giving it a better store of value compared with fiat currencies. Rather than experiencing inflation, it uses 'halving' to reduce its circulating supply while increasing its value every four years.
On the other hand, the Rand is not designed to fight inflation unless South Africa's Apex bank creates policies to protect the Rand from inflation. Such policies have no real effect in preventing Rand's downward spiraling against Bitcoin's upward trend, which recently hit an all-time-high (ATH) of $62,000 in April.
High technological and financial literacy driving bitcoin trading
South Africa has one of the highest, technologically savvy youth populations worldwide, driving renewed interest in bitcoin and blockchain technology. Google Trends showed that aside from Nigeria, more South Africans searched for 'bitcoin' online using the Google search engine, topping other nations.
Hence, the discovery of bitcoin potentials drives more financially literate youths into seeking an alternative source of income in bitcoin and cryptocurrency-related activities, thus driving bitcoin trade above forex trade to combat the rising unemployment rate.
It is easier to open a bitcoin wallet than a bank account
Opening a bitcoin wallet does not require much effort; in some instances, you might need to provide an email address or phone number for verification purposes. For other exchange sites, you might have to provide identity as part of the KYC requirement; other than that, you wouldn't be required to fill elaborate paperwork and meet up with stringent banking conditions as obtained in the banking process.
Not to mention, the difficulty of banks penetrating remote regions. This boosts Bitcoin trading over Forex since it does not offer enough flexibility compared with Bitcoin usage.
Conclusion
So, to answer the question - is Bitcoin trading becoming more popular than Forex in South Africa? The answer is Yes. In fact, Bitcoin has come to stay in the hearts of South Africans.
South Africa has some of the highest numbers of Forex traders, with more forex brokers having a base in South Africa. Likewise, Bitcoin's intrinsic characteristics help it find more practical use in South Africa and other African nations.
Additionally, more Africans are hopeful of getting their big chunk of pie out of Bitcoin’s positive growth trends as investors worldwide forecast a $100,000 price hit for Bitcoin before the end of 2021.
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.