A survey by Luno, a London-based cryptocurrency platform, has revealed that a growing number of people in South Africa prefer holding cryptocurrencies such as bitcoin and bitcoin cash rather than the local fiat unit, the rand. About 70 percent of South Africans have heard about virtual currencies, and most people have been using them as a hedge against inflation and exchange volatility, the report said.
Major Monetary Shift
The survey, “Why do people buy cryptocurrencies? A South African perspective,” was conducted by Kantar TNS on behalf of Luno in October. It covered 10 countries, including South Africa, with a sample of around 1,000 people in each country. The report found that 69 percent of South African respondents are familiar with cryptocurrency, while one-third own digital assets and 53 percent are interested in buying them. More than 80 percent of the respondents that own digital coins view them as investments, while 23 percent have used cryptocurrencies for online transactions. Only 12 percent of the respondents said they have used cryptocurrencies for cash transfers to friends and family.
The findings follow a tumultuous year for the South African rand, which has fallen by more than 20 percent against the dollar this year. The recent volatility has partly been a response to the appointment of a record four finance ministers over the past two years, as well as news that Africa’s most sophisticated economy has slumped into recession.
As a result, a large number of investors have turned to alternative investment options such as bonds and virtual currencies. According to Luno, 40 percent of the survey participants agreed that digital assets are a safe investment option, while 61 percent described them as profitable. Around 74 percent said they would like to pay with cryptocurrencies in online stores and brick-and-mortar shops.
Marius Reitz, Luno country manager for South Africa, said the world is currently going through a major shift in the evolution of money:
The existing financial system was built for a non-digital age but the world now has access to new technologies like decentralized cryptocurrencies. This is enabling us to reimagine the financial system and to upgrade the world to something better.
Gender, Age Divide
The survey, which offers insight into the psyche of the cryptocurrency community, revealed that the uptake of virtual currencies has been marginally higher among younger South Africans. But overall, age has not proven to be a significant differentiator. This challenges the common perception of younger consumers being more digitally adept and willing to take on greater financial risk.
Results from the survey, which had an even male to female ratio in the sample, revealed that gender is a significant matter. Fewer women own cryptocurrencies or are familiar with them than men. The results are in line with the gender split seen in conventional investing, where the participation of women also tends to be lower than men.
A recent study conducted by Nelson Mandela University found that women tend to be less confident about financial and investment matters, according to the report.
It is possible that this same trend from conventional investing is exhibiting itself in cryptocurrencies. This means that to increase participation by women in cryptocurrency, it should simply require that women become as familiar with the technology as men.
In addition, 48 percent of South Africans said that they are concerned about losing money when using cryptocurrencies, mainly due to phishing scams or transaction errors. Other security concerns revolve around the availability of trusted suppliers of cryptocurrency. Greater stability in the price of cryptocurrencies was only the third-highest factor affecting confidence among South African survey respondents.
The findings of the Luno report also suggest, and possibly confirm, that the cryptocurrency revolution has had a significant impact on emerging markets. Despite considerable price volatility, respondents from South Africa, Indonesia and Malaysia have reported higher levels of familiarity with cryptocurrencies, as well as ownership of them, than individuals in European markets. In Europe, people stated that they do not have enough knowledge or access to information to feel secure about buying or using digital coins. But in South Africa, Indonesia and Malaysia, this hasn’t been a big issue; rather, people said that they are confident about buying cryptocurrencies, as they feel they have access to enough information.
What do you think about cryptocurrency adoption in South Africa? Let us know in the comments section below.
Images courtesy of Shutterstock
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