Luno, South Africa’s leading cryptocurrency exchange, says you are still an early adopter if you are buying crypto for the first time even now.
“The world has just started to recognise the potential of cryptocurrencies, so there is definitely more time to get involved,” says Marius Reitz, Luno’s GM for Africa, “Over the past few months, we’ve seen adoption mature, and the desire to understand and get involved in crypto continues to grow.”
The first step is to understand what the fuss is about. As an emerging technology, it is often compared to the internet in the 1990s – within the first decade, the internet’s multiple uses gradually became apparent.
Bitcoin and the technology behind it are considered by many to be the payment system of the future – the main reason most Bitcoin holders have taken a long-term view.
“The problem Bitcoin is solving is much more important than whether it is too early or too late to buy crypto. Bitcoin is a new way of looking at our financial system; one that’s more transparent, open, and fair. It makes money more useful and helps it keep its value, providing a hedge against rising inflation and currency devaluation,” says Reitz.
Bitcoin crosses many lines: it can be used for payment like a currency; it can be used as a store of value since it has controlled supply, like gold or other commodities; and it derives more value and utility from developers who improve the code and ways it can be used.
Reitz cautions that it is still early days and that while Bitcoin has soared into a trillion-dollar industry, Bitcoin’s market cap is only about 10% of the gold in circulation.
“Luno believes that Bitcoin will play a key role in how we think about and use money in the future and for this reason, we don’t predict price,” says Reitz. A longer-term view shows crypto to be on an upward trajectory, even with massive price drops. The extreme volatility is expected to continue through more fits and starts.
Bitcoin has broken through all-time price highs in 2021. Since the start of May, the Bitcoin price first dropped by 30% but has now rebounded, rising from R571,954 ($38,286.03) on 4 August to trade at around R690,000 ($46,187.91).
Many believe that the price of the world’s largest cryptocurrency will continue to rise. Global financial institutions are increasingly getting involved in crypto. Payment giant PayPal, for instance, is launching the ability to buy and sell crypto and Mastercard plans to give merchants the option to receive payments in cryptocurrency this year.
There are also several high profile companies choosing to place millions of dollars of their treasury reserves into crypto, including Tesla, Grayscale and Squared.
Wall Street giants like JP Morgan, who were initially very skeptical about crypto, are now launching services to ensure their clients can include their crypto investments in their portfolios.
Says Reitz, “We haven’t yet seen the same level of corporate adoption in Africa, but there is greater adoption in countries with volatile currencies and where it is difficult to transfer money. When crypto payments become mainstream and people are more familiar with it, Bitcoin’s value will become much more apparent.”
Bitcoin’s design ensures that there will only ever be 21 million Bitcoin in circulation. Since the start of the global crisis caused by Covid-19, Bitcoin is seen by many as a hedge against inflation. Traditional currencies are losing value as governments worldwide print money which reduces the value of fiat currency.
When you see Bitcoin as a kind of insurance policy against the deterioration of your money, you realise that it’s a smart way to protect your wealth. Readers who want to begin trading in cryptocurrency like Bitcoin can download Luno’s simple-to-use app to get started.