South Africans spending $1.4m Crypto a year on everyday shopping

Business Insider

a day ago

To the vast majority of users, cryptocurrency is seen as an investment or trading vehicle. Bitcoin is popular for its potential long-term gains, while smaller coins are commonly used by speculators looking to make sizeable gains from lesser-known cryptocurrencies. However, cryptocurrency wasn't set up as a form of investment.
It was designed to operate as a means of transferring value. Its first official use was to buy pizzas, and this was in closer keeping with Bitcoin founder Satoshi Nakamoto's vision.
Cryptocurrency Popularity
Cryptocurrency has become popular as a store of value, as well as an investment. It is also becoming increasingly popular as a method of paying for goods and services, although only really in some restricted jurisdictions. But, it has become popular for online payments and in the iGaming and sports betting world.
Cryptocurrency can be used to facilitate fast payout sportsbooks online, thanks to rapid transaction times. According to online gambling expert Brett Curtis, payments can be completed within a matter of minutes, sometimes instantly, rather than several business days, which is how long it takes with some traditional payment methods like credit cards.
South African Crypto Usage
While it has not become a mainstream form of payment in any country, some areas do find considerable use for cryptocurrency as a payment method. In South Africa, it has been reported that residents have spent an average of $112,000 a month since November 2024 on groceries and other everyday items.
Satoshi's Vision
Bitcoin was launched in 2009 by Satoshi Nakamoto. In Bitcoin's 2008 whitepaper, Satoshi described Bitcoin as 'a purely peer-to-peer version of electronic cash [that] would allow online payments to be sent directly from one party to another without going through a financial institution.'
In the same year as its launch, the first Bitcoin exchange rate was offered, and in 2010, Satoshi saw his dream of a decentralized payment method realized when software developer Laszlo Hanyecz bought two Papa John's pizzas for 10,000 Bitcoins. At the time, that equated to around $41. At today's exchange rate, the pizzas cost $600m each. Bitcoin enthusiasts now celebrate Bitcoin Pizza Day on May 22 to mark the occasion.
However, while Satoshi envisioned a world in which users would be able to send Bitcoin easily to one another and spend cryptocurrency in shops and at other businesses, it took some time for organizations to work out how best to deal with incoming Bitcoin.
Early Crypto Challenges
Cryptocurrency has unique requirements for vendors and businesses, and this was especially true in the technology's early days. Whereas payment gateways exist now that will convert crypto payments to local currencies before depositing them into the business's account, this hasn't always been the case.
Originally, retailers needed crypto wallets and would have to accept payments the same as any individual accepting a Bitcoin transfer from another party. In 2014, however, online retailer Overstock started accepting Bitcoin payments. In January of that year, it accepted Bitcoin payments from US customers, and in September, it rolled the service out to its customers around the globe.
At the time, Overstock founder and CEO Patrick Byrne said: 'As long as you can get on the internet, you can order and pay in bitcoin. You can order in North Korea if you want – as long as you're having things delivered to, say, Singapore.'
NewEgg and TigerDirect also started accepting Bitcoin payments in the same year, and companies around the globe started to follow suit.
The Potential To Serve Unbanked Citizens
Bitcoin has long been heralded as having the potential to serve the approximately 1.5 billion unbanked citizens of the world. Unbanked citizens are people with no basic banking services, which can make it impossible to even receive a monthly salary, and can make it difficult to pay for anything from groceries to utility bills and rent.
It is estimated that around 23.5% of South Africa's population is unbanked, with many more underbanked, meaning they have severely limited banking functionality. This means around 12 million South Africans do not have access to what many people consider basic financial services.
This high ratio of unbanked citizens is one possible reason why South Africa has seen a significant uptick in the number of people using cryptocurrency and the total revenue of crypto purchases.
Luno Pay In South Africa
Crypto payment platform, Luno Pay, launched a retail payment tool in November 2024 and has said that users have spent a combined $1.1m in cryptocurrency since then. Payments have been used to buy flights, furniture, food, and many other items and services. The company also reported last year that 31,000 retailers in the country accepted cryptocurrency, and this figure has likely risen in the 8 months since the announcement.
It's worth noting that while Luno Pay is the most significant crypto payment platform in South Africa, other crypto payment options do exist. Therefore, the figure has been estimated at around $1.4m, which will include direct wallet-to-wallet payments as well as the use of other platforms, and even exchanges. When it comes to exchanges, South Africa's most popular has a recognizable look. Binance and Coinbase lead the way, with the likes of eToro, Kraken, and Gemini also featuring high on the list.
South Africa's Crypto Usage
It is estimated that nearly 10% of South Africans have or hold some cryptocurrency, which is higher than 7% of the global population estimate. These figures continue to increase, especially as BTC prices continue to rise and as countries and banks around the world wrestle with regulatory frameworks.
The SARB And CBDCs
The South African Reserve Bank (SARB) has initiated its own investigation into Central Bank Digital Currencies, for example. CBDCs are digital currencies that bear some similarities to cryptocurrencies. They operate on blockchain networks and are spent, sent, and received similarly to the likes of Bitcoin.
But where cryptocurrency is decentralized, CBDCs are digital equivalents to local currencies, and they still have the backing and administrative support of central banks. The SARB has not definitively indicated its intention to launch a CBDC, but it is likely to follow other countries that launch their own digital currencies.
The Implications on The Crypto Market
As South Africa and the rest of the African market continue to increase their crypto spending, it naturally means an increase in crypto acquisitions. This means more money will flow into the cryptocurrency market, not only causing likely price increases for the likes of Bitcoin but also ensuring greater liquidity and even price stability for the market as a whole.