Cryptocurrency growth is spread across the globe. Conversations revolving around cryptocurrency investment are commonplace. It is not uncommon to hear people delve into the topic at parties or offices.
The discussion on cryptocurrency investment is a moot point. While proponents of crypto investment are considered risk-takers, the critics argue the cryptocurrency bubble will burst soon.
That notwithstanding, the crypto market grew several folds in the past year, especially due to endorsement and support from influential people like Elon Musk. In September 2021, El Salvador became the first country to recognize Bitcoin as a legal tender.
Crypto in Africa
In Africa, South Africa is among the leading countries in crypto adoption.
The country boasts of the most robust regulatory framework on forex trading in the whole continent, and only FSCA-regulated forex brokers can legally operate in SA.
It is not only forex trading on which regulators from the country have been lately focused on, as they have recently made a notion that recognizes cryptocurrency investments as taxable assets. In addition, the country is experiencing increasing crypto activities.
It is for this reason that KLA’s account manager Tessa Nowosenetz decided to study South African attitudes and behaviors toward cryptocurrency. KLA is a firm that specializes in data and market research.
KLA survey on South Africa crypto ownership
According to KLA research, 15% of South Africans own cryptocurrencies. The percentage of ownership ranks second worldwide. In other words, the percentage of cryptocurrency holders in the country is the second-highest globally.
However, while the number of crypto investors is big, the investment amount is low. This signifies that the South African investors are pretty much experimenting with crypto investment.
According to the survey data, 25% of South African adults hold cryptocurrencies worth between $7 (R100) and $67 (R1,000). People holding cryptocurrency worth between $67 (R1,000) and $670 (R10,000) make 13%, while 6% of the crypto investors own valued between $670 (R10,000) and $3,350 (R50,000). Only 3% of the investors own cryptocurrency worth over $3,350 (R50,000), which according to the ZAR to BTC exchange rate currently equates to owning 0.0777 BTC.
Here is an interesting bit. KLA notes that 36% of South Africans plan to venture into crypto investments in the future. If you add this number to the 25% of investors dabbling with low-value investments, it shows a great curiosity and interest in crypto investing.
Why the sudden increase in the number of people interested in crypto investment? Well, the research went a step further to determine the motivation behind crypto investment in South Africa.
High curiosity for crypto investment
The first reason is that many people in South Africa endear cryptos investments due to the massive return on the investment and to increased problems related to hyperinflation. According to the KLA research, 43% of South Africans said the main reason to invest in cryptos is to make considerable gains in short-term investments.
Besides, getting a good return on investment (ROI) and several other reasons make South Africans interested in crypto investment. 20% of the survey respondents said cryptocurrencies are ideal for portfolio diversification. 16% of the investors are interested in cryptocurrency because it is accessible and easy to invest in. Essentially, you only need to have initial capital and a smartphone.
8% find virtual currencies interesting to invest in, while 4% have bought crypto for sending to people outside of the country. Another 4% have invested in crypto because it is not regulated. Lastly, about 3% of the investors have put money in crypto because it is cool and trendy. They can talk to friends and family about owning cryptos.
Lack of crypto knowledge
Despite the high interest in digital currencies among South African investors, many still do not understand how virtual currencies work, their value and their details.
In fact, according to the study, 44% of the respondents cited the lack of know-how on cryptocurrency elements and working as the biggest concern. This observation points to an interesting scenario. Consumers are willing to risk assets they do not understand for quick gains.
But not everyone is interested in cryptocurrency. In fact, 17% are not interested in cryptocurrency and do not have any plans whatsoever to invest in cryptocurrency in the future.
A third of the people not interested in cryptocurrency stated that they prefer investing in formal and regulated financial products. Slightly less than a quarter said the main reason is that they do not understand what crypto investment entails.
Therefore, lack of investment knowledge is a major challenge ut that is not all. 11% of the people said cryptocurrency is a risky investment venture, while 10% do not have any trust with virtual currencies.
The governor of the South African Reserve Bank Lesetja Kganyago has weighed in on the issue of cryptocurrencies.
He said the government will regulate the industry to protect the investors from losing their money. He added that the cryptocurrency is backed by blockchain technology, which has numerous uses. For this reason, the South African Reserve Bank is also experimenting with blockchain technology like other central banks.
Final word
South Africa is a leading economy in Africa. It is quite ahead in fintech and online trading. For instance, it leads in forex trading and is the first country to put in place solid crypto regulations across the continent.
According to the KLA research, it is among the leading economies leading crypto adoption. In a nutshell, South Africa is setting the pace for cryptocurrencies on the continent. Perhaps other countries can borrow a leaf.
Michael Kuchar is a forex and cryptocurrency trader and blockchain enthusiast. He specializes in intraday trading of G20 currencies, and to anticipate potential market moves he utilizes a fusion of both fundamental and technical analysis. Michael is the founder of trading educational website TradingBeasts and also writes for CoinSpeaker, FX Empire, Equities, DailyForex and TalkMarkets.
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