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Daily Maverick
18-05-2025
- Business
- Daily Maverick
To crypto or not to crypto — a personal finance perspective
From Pick n Pay to Trump, cryptocurrency is edging further into the mainstream, promising freedom from banks, big returns… and big risks. The question is: should it play a role in your personal finances? In a recent Money Cents webinar, Business Maverick editor Neesa Moodley chatted to senior journalist Lindsey Schutters to address the question that won't go away: how does Bitcoin fit in your investment portfolio, and what do you need to know? In 2014, Bitcoin made a fleeting appearance on South African airwaves. By 2016, you could buy a single bitcoin for R2,500 to R3,500. A decade later, amid global inflation shocks, rising interest rates and serial collapses in public trust, it now fetches nearly R1-million – and still evokes the same cocktail of suspicion, confusion and that nagging fear that the train has already left the station. A sceptic's conversion 'If you'd asked me five years ago, I would've said: crypto? No way. I'm not touching it with a bargepole,' Moodley stated as the webinar began. Yet, as crypto coins have become increasingly mainstream and accepted, and the maturation of certain coins such as Bitcoin and Ethereum have increased, it could well be time to start looking more seriously at crypto. Bitcoin's decoupling Until recently, Bitcoin looked a lot like a glorified tech stock that often closely tracked the Nasdaq, while its volatility swung with every Fed rate announcement, with actual use cases still appearing more ideological than functional. That changed this year. 'We had a big tech stock drop recently,' Schutters noted. 'And while all those dropped, Bitcoin actually went up.' For Schutters, that's more than noise. It may mark Bitcoin's decoupling from tech equities – making it a viable hedge, rather than just a speculative bet. 'Smart investors spread their money across different things,' he explained. The key to diversification is being invested in assets that don't move in the same direction – so when other assets are crashing and Bitcoin is rising – that could help to keep your investment portfolio stable. Hedging your bets To be clear: no one's suggesting Bitcoin replace your retirement fund.'Think of it like gold,' Schutters advised. 'It should be a discretionary investment, rather than part of your core investment portfolio.' Bitcoin's core strength isn't yield – it's scarcity. Only 21 million coins will ever be issued. Every four years, the reward for 'mining' new coins is halved. The most recent halving occurred in April 2024, cutting the per-block reward from 6.25 to 3.125 BTC. As more computing power is required to generate fewer coins, mining costs – and arguably, Bitcoin's price floor – rise accordingly. 'Bitcoin is deeply linked to energy,' Schutters explained. 'As it gets harder to create, and you have to spend more, it becomes more valuable per se.' How and where to actually buy it For South Africans, buying crypto still means navigating a dense web of apps, wallets and custodial risk. Schutters doesn't recommend Bitcoin ETFs or derivatives. 'That's trading on crypto – not actually interfacing with it.' If you are investing in crypto for the first time, you can start with local, FSCA-compliant exchanges such as Luno, VALR, or Binance. Each allows you to convert rands into Bitcoin and other cryptocurrencies directly. Choosing an exchange is only half the picture – you also need to understand wallets – digital accounts that store your coins. Hot wallets are connected to the internet (convenient, but vulnerable). Cold wallets – such as USB hardware devices – are offline and far safer, but only if you don't lose your password. 'There is no 'forgot password' option,' Schutters warned. 'If you lose your keys, that Bitcoin is gone.' He cited the now-notorious case of James Howells in the UK, who lost access to more than $760-million in bitcoin after his hard drive was thrown away. Still, beware the snake oil For every legitimate crypto offering, there are dozens of scams.'There's a cottage industry of day-trading meme coins now,' Schutters said. The FTX scandal is only the most infamous recent example. The exchange's founder, Sam Bankman-Fried, was convicted of fraud in 2023 for misappropriating billions in customer funds, many of whom believed their coins were safely in custody. Schutters' recommendation is to rather stick to Bitcoin. Avoid flashy altcoins unless you know what you're doing. 'Especially if you're just starting out.' Taxes, fees and real-world use Crypto may be borderless, but it's not invisible. The South African Revenue Service (SARS) treats crypto as an intangible asset; this means all disposals – including trades, conversions, or off-ramping into rands – trigger taxable events. Traders or individuals who frequently buy and sell crypto for short-term gains are taxed on their profits as regular income. Investors holding crypto for long-term appreciation are subject to capital gains tax, which is lower, but only applies to 40% of the gain (less your annual CGT exemption). Transaction costs are another blind spot. Luno and VALR charge around 1.4% for instant EFTs, while card deposits can reach 3.9%. Binance has similarly tiered fees. 'What you see in your wallet isn't what you'll get,' Schutters said. 'A good rule of thumb is to skim 3% off for costs.' Yet crypto is slowly becoming spendable. Pick n Pay now accepts bitcoin payments via the Lightning Network, a Layer 2 protocol that allows for fast retail transactions without congesting the main blockchain. 'It's kind of like tap-to-pay,' Schutters noted, though volatility still makes crypto an imperfect payment tool. Many merchants opt to settle in stablecoins like USDC, which are pegged to fiat currencies such as the US dollar. Trump, strategic reserves and centralisation Towards the end of the webinar, Moodley raised the global curveball: Donald Trump's plan to create a 'crypto strategic reserve' for the US, comprising stablecoins and potentially Bitcoin. Schutters didn't mince his words. 'If institutions or governments control too much, it defeats the founding principles of crypto,' he said. 'You'd need more than 50% of the mining power to make changes to the blockchain – and that's the danger of centralised accumulation.' The irony? A technology built to prevent systemic dominance could still end up captured by it. 'I'm committed to telling a balanced narrative so people are informed enough to make their own decisions,' said Schutters in closing. In an ecosystem dominated by hype, misinformation and empty promises, that alone might be the rarest currency of all. DM
Daily Maverick
12-05-2025
- Business
- Daily Maverick
Local crypto market evolves beyond Bitcoin, embraces altcoins and stablecoins
That ticker you see on the Business Maverick section homepage? It's the sign of a shifting tide in the local crypto market that may upset the traditional finance ships. When Bitcoin decoupled from its 'volatile investment' paradigm during Donald Trump's tariff war, the price rally put off many would-be crypto investors. But it represents just one asset in a vast universe of digital currencies. According to Christo de Wit, cryptocurrency exchange Luno's country manager, Bitcoin functions primarily as 'digital gold' and a 'store of value', while altcoins occupy entirely different asset classes. 'There are around 20,000 other cryptocurrencies besides Bitcoin,' De Wit explains to Daily Maverick in an interview. 'Each has its own underlying foundation and blockchain technology.' Altcoins span many categories, including artificial intelligence, gaming, layer-one protocols and layer-two scaling solutions. For potential investors, understanding an Altcoin's utility and underlying technology is crucial before committing funds. 'You need to understand what the asset or coin is used for and how its value has grown relative to fiat currencies or even Bitcoin,' says De Wit. 'The market can be very overwhelming, given its breadth and complexity.' Luno sails the Altcoin seas Luno – once the most conservative option to turn rands into Bitcoin – is turning its sails to the wind and significantly expanding its crypto offerings. Having started with just a handful of cryptocurrencies, the exchange now lists more than 31 different digital assets and continues to grow its selection. 'We need to grow with the industry,' says De Wit. 'As the crypto market matures, particularly with regulation being adopted globally and increased scrutiny, we've been able to expand our product at a much faster pace because we've laid that solid foundation.' This expansion goes beyond simply adding new cryptocurrencies. Luno has launched additional products, including staking wallets, allowing users to earn rewards for holding certain cryptocurrencies. New coins, new rules One does not simply list a new currency. They undergo scrutiny through Luno's digital asset selection committee, which evaluates factors such as liquidity, security protocols and past security incidents. This is Luno's typically cautious approach to keep customer investments safe while expanding responsibly. 'We're pro-compliance and take a sensible approach to drive adoption through trust, safety and security,' says De Wit. 'Our mission is to upgrade the world to a better financial system by giving exposure to the crypto industry and blockchain technology to our user base, expanding their knowledge.' Perhaps no cryptocurrency better exemplifies the unpredictable nature of the Altcoin market than Dogecoin. What began as a novelty token based on a meme has transformed into one of the cryptocurrency market's most recognised assets – with some credit to Elon Musk riding the meme 'to the moon'. 'Dogecoin started as a complete replica or fork of Bitcoin's code,' De Wit explains. 'Despite questions about its fundamental utility beyond uses like rewards and online trading, it has grown into such a big asset.' Now ranking in the top 10 cryptocurrencies by market capitalisation, Dogecoin boasts 'a huge following'. 'This represents an evolution from Memecoin to fully fledged Altcoin,' says De Wit. 'Dogecoin is not going anywhere.' What this means for you Think crypto is just volatile Bitcoin? Think again. The market has exploded with thousands of 'altcoins' designed for specific uses (like gaming or AI) and 'stablecoins' pegged to currencies such as the US dollar. While Bitcoin is seen as 'digital gold', altcoins offer different opportunities. But beware – understand what a coin does and its underlying tech before investing, as the market is complex and risky. Stablecoins are shaking up cross-border payments, especially in Africa. They offer a way to potentially send or receive money internationally faster and with lower fees than traditional banks, reducing currency conversion losses. The bigger picture: Crypto isn't just speculation any more. It's starting to offer practical solutions, particularly for payments, challenging traditional finance systems. Stablecoins to tame the remittance tide While volatile cryptocurrencies capture headlines, stablecoins – digital currencies pegged to stable assets such as the US dollar – are quietly revolutionising cross-border payments across Africa. Luke Kyohere, chief product and innovation officer at Onafriq, points to USDC, a regulated and fully reserved stablecoin pegged to the dollar, as a prime example. 'Traditional money transfers are often characterised by high fees, slow settlement times and multiple currency conversions that erode value,' Kyohere explains. 'Stablecoins leverage the speed of blockchain technology while eliminating the volatility concerns of traditional cryptocurrencies.' For businesses, Stablecoin integration reduces transaction settlement times from days to minutes by 'eliminating the need for multiple intermediaries, minimising FX slippage, and ensuring near-instant reconciliation'. This efficiency is particularly valuable in Africa, where liquidity constraints and currency volatility are common challenges. Stablecoins now account for an impressive 43% of crypto transactions in Africa. Their adoption is driven by the high volume of intra- and inter-Africa cash movement between numerous smaller countries, and the need to hedge against inflation and currency risk. While mobile money has 'transformed domestic flows significantly in Africa', stablecoins excel in cross-border transactions because they are 'already cross-border interoperable', unlike mobile money systems that are typically 'tied to borders and countries'. Disrupting fintech This rapid rise of stablecoins presents both challenges and opportunities for established financial technology companies, particularly those focused on cross-border remittances using traditional fiat methods. Cornelius Coetzee, Verto country director, a company specialising in B2B cross-border payments with fiat currencies, acknowledges facing 'heat from the crypto community' because cryptocurrency 'specifically solves a lot of' the problems Verto's clients face, such as illiquidity and navigating complex exchange control regulations. 'Crypto came into existence because of exactly the problems that our clientele face,' he admitted in an interview with Daily Maverick at Converge Africa. 'We're feeling a hit from the Stablecoin community.' Coetzee believes that in the long run, stablecoins 'will form part of our ecosystem', suggesting they see stablecoins not purely as a threat but as a potential future component of their service. However, Coetzee also believes that while startups and millennials are predominantly adopting stablecoins, 'larger corporates and more established businesses will still stick to fiat'. This indicates that while stablecoins offer a compelling alternative, especially for newer or digitally native businesses, traditional fintechs serving larger enterprises still see strong demand for fiat-based solutions. Traditional finance isn't leaving anytime soon. DM
