Levelling the playing fields by taking cryptocurrencies to the streets
Companies want to level the playing fields by making cryptocurrencies, which are often associated with high-end investments, more accessible to ordinary citizens.
Cryptocurrencies are often thought of as expensive or a high-end investment, but some players in the industry want to open up the field to make it accessible to everyone.
Thato Mokoena is the South African country manager for Pan-African crypto asset exchange YellowCard and says they aim to create financial inclusion through access to cryptocurrencies.
“If one has the hypothesis that crypto is the future, you don’t want the future to be restricted to one segment of the market, you want everybody to be able to access and also participate in this asset class and for us that’s very, very important.”
Luno, the international cryptocurrency platform founded by South Africans, now has over nine million users and 690 employees across more than 43 countries. Marius Reitz, Luno’s GM for Africa, says there is scope for crypto to be used more widely, particularly because it allows for direct payments without intermediary fees.
Neil Ferreira is CEO and founder of Safcoin, a local cryptocurrency that started in 2018 and has since listed on local and international exchanges. He says: “While cryptocurrency use and trade has often been centralised among wealthier subgroups, the space has grown exponentially in years past, with crypto adoption now widespread throughout age and class demographics.”
Ferreira says that cryptocurrencies have already proven themselves as a tool to enable economic participation in the country and the continent, particularly among the younger population. “In light of the staggering unemployment rate coupled with the prevailing lack of access to traditional banking or financial services in more rural regions, cryptocurrency has removed barriers to trade, allowing for seamless transactions through optimised payment gateways and unlocking access to global market segments for small to medium businesses.”
One area of growth could be remittances, which normally require high costs and long processing times. Reitz says: “Crypto is also being used by traders in countries where the local currency is very volatile or scarce. In Nigeria, for instance, we saw traders using crypto when there was a shortage of foreign currency.”
Research done in part by Luno has shown that rapid adoption of cryptocurrencies is likely, particularly given where there are high inflation rates, volatile currencies and underdeveloped banking infrastructure.
For YellowCard, larger reach means optimising both their products and marketing for a wider audience, particularly those that have been previously underserved in terms of general financial products and cryptocurrencies in particular. Thato Mokoena says: “Our ideal customer is somebody from your townships or rural areas who might have not gotten the opportunity to access crypto assets in the past.”
One way of doing this is by not having a large minimum amount in place. This can be as low as R100 with YellowCard or R1 on Luno. Reitz says: “With no minimum deposit or transaction sizes, any person with an internet connection and internet-enabled phone can open a Luno account and access crypto.”
The uses of cryptocurrencies are most likely around storing of value as a mechanism for investing and saving but also as tradable currency that may also make extra returns.
Mokoena says: “The beautiful thing about crypto assets is that, although we are looking at a few sort of like use cases, the jury’s still out in terms of what else could be done using crypto in the future. “
In terms of challenges, Mokoena says that because there is not finalised legislation, there can be hurdles navigating best practices, such as anti-money laundering standards, and making systems as safe as possible.
Education is also an ongoing challenge. YellowCard tackles this by conducting activations at township malls as an opportunity to meet with potential customers and explain crypto.
Reitz says that there are still difficulties in terms of providing safe access and the necessary infrastructures, both on the exchange and the merchant side.
Reitz says that digital barriers also continue to be a challenge, for instance with many people in Africa using feature phones when most cryptocurrency platforms require smartphones.
“Regulation and the lack of typical crypto-enabling infrastructure in more rural areas hamper wider adoption, but paradoxically present a huge opportunity to deliver the much-needed transformation of financial systems across many countries on the African continent,” says Reitz.
Ferreira is also positive about the future of cryptocurrencies. He says: “The idea is that the world is undergoing increased transformation through digitisation, and with this, increases the need for digital means to conduct life for the man on the street.
“In this way, crypto is no longer a commodity centralised among the wealthier powers that be, it is now centralised in the hands of the people.”
He explains that more merchants and service providers are starting to accept crypto, and this heralds a possible great growth in the space. Ferreira says countries like Nigeria and the Bahamas are already seeing these upward trajectories. DM168
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