The Ultimate Guide: Investing In Bitcoin In South Africa

Bitcoin is a decentralised digital currency that is not issued or controlled by a government or central bank, but by its users. In South Africa, the demand for Bitcoin has been steadily increasing, and some South African firms have started converting a portion of their cash holdings into cryptocurrencies. However, it is important to note that cryptocurrencies are highly speculative and volatile, and there are risks associated with investing in them. If you are considering investing in Bitcoin in South Africa, it is essential to do your research, understand the basics, and be aware of the potential challenges and risks involved.

Bitcoin exchanges

A bitcoin exchange is a website that facilitates the process of exchanging your Rand for bitcoin with other users. If you want to invest in bitcoin, the best place to do that is at a bitcoin exchange.

On a bitcoin exchange, you are not actually buying the bitcoin from the exchange itself. Instead, you are trading with other users who are putting their bitcoin up for sale. The exchange acts as a middleman, ensuring that sellers get their Rand, and buyers get their bitcoin. You cannot get scammed by another bitcoin trader on a bitcoin exchange as you do not know who you are trading with, and have zero communication with the other traders.

Traders use bitcoin exchanges to trade bitcoin like Forex 24/7, but for investment purposes, you would just use the exchange to buy your bitcoin when investing or sell your bitcoin when divesting.

Examples of Bitcoin Exchanges in South Africa

• Luno: Luno is one of the most popular and trustworthy Bitcoin exchanges in South Africa. Users can buy, sell, store, and trade Bitcoin and Ethereum. Luno has a global presence, including countries like South Africa, the United Kingdom, and Malaysia. With Luno, security is a priority, offering access to cryptographically secure Multi-Factor Authentication. The minimum deposit to open a Luno account is USD 10 / R188 ZAR.
• Binance: Binance is a popular global Cryptocurrency exchange, trusted by millions of users. Binance offers access to Research, an open-access learning hub, and is highly committed to user protection. Binance embeds state-of-the-art security measures and strict data privacy controls across its whole system. The minimum deposit to open a Binance account is USD 10 / R188 ZAR.
• Coinbase: Coinbase is a trusted crypto exchange that is trusted by millions of users worldwide. Coinbase users are allowed to engage with crypto assets, including trading and staking. Coinbase does not require a minimum deposit to open an account.
• Ice3x: ice3x is a bitcoin exchange that normally provides fast, safe, and cheap services. They allow users to open an account, deposit Rand by EFT to fund the account, and thereafter exchange the Rand deposited for bitcoin.
• Altcointrader: South Africa's largest crypto exchange.

How to Buy Bitcoin on a Bitcoin Exchange

• Sign up for a free Luno Wallet via the web, iOS, or Android, and follow the instructions to register, set up a profile, and redeem the promo code. Buyers can sign up for Luno by using their personal/business email address and password.
• Luno will send a confirmation email to register the newly created account.
• Verify your account: To verify an account, the account holder will need to select the settings option in the menu bar and click on the Upgrade Option to link to the Personal Details page. Once the Personal Details section has been completed and verified, the account will be upgraded accordingly:

• Level 0: The account and personal details have not yet been verified.
• Level 1: The account is verified and limited to a total of R15 000 for deposits and withdrawals.
• Level 2: The account is verified and limited to R50 000 for deposits and withdrawals.
• Level 3: The account is verified, and no limit is set for deposits or withdrawals.

• Deposit money into the account: When the account has been verified, the buyer will be able to immediately deposit money into the account and buy Bitcoin. When the deposit has cleared in the Luno account, it will show up in the digital wallet.
• Select ‘Wallets’ to make a deposit, then select ‘Deposits’ at the bottom of the wallet link.
• Select a preferred bank from the list of main banks in South Africa listed on the site.
• Select ‘Next’ to instruct Luno on how much money will be deposited into the account. A reference number will appear on the screen. Buyers will need this reference number and the Luno banking details to proceed with making a deposit.
• Buy Bitcoin with Instant Buy: The ‘Instant Buy’ feature on Luno is a fast and easy way to buy Bitcoin in South Africa. However, there is a fee for this facility, and a cheaper option is to place a ‘Buy order’ through Luno.
• Select the ‘Buy/Sell” button on the Luno screen and switch between Bitcoin (BTC) and Rand to transact. Select ‘Buy’ to complete the order.
• Place a Buy Order on the Exchange to buy Bitcoin: To place a buy order to buy Bitcoin, the following steps should be taken:

• Select ‘Exchange’ to go through to the ‘Buy Order’ feature.
• Select ‘Place Order’ to activate a ‘Buy Order’ request where the order to buy will be matched by a person’s order to sell.
• Any outstanding amount that is not matched in a buy/sell order will remain in the account holder’s account and is available to be matched with other buy/sell orders until the whole amount has been spent.

The Place Buy Order option can now be selected when the buyer is ready to buy the Bitcoin. Once the transaction has been confirmed, the buyers’ Bitcoin and ZAR balances will be updated.

Credit and debit cards

Step 1: Choose a Reliable Cryptocurrency Exchange

First, you need to find a reputable cryptocurrency exchange that allows you to buy Bitcoin with a credit or debit card. Some popular options include Changelly, Luno, and VALR. These platforms offer secure and reliable environments for crypto trading.

Step 2: Register and Verify Your Account

Once you've chosen an exchange, create an account by providing your personal information, such as your email address and phone number. You will also need to verify your identity by submitting a government-issued ID and proof of address documents, such as utility bills.

Step 3: Link Your Credit or Debit Card

To purchase Bitcoin with your card, you need to link it to your account. Go to the "Payment Method" section and enter your card credentials, including the cardholder's name, card number, expiry date, and security code.

Step 4: Buy Bitcoin

After your deposit method has been verified, navigate to the section where you can buy Bitcoin or other cryptocurrencies using your credit or debit card. Specify the amount you want to buy in South African Rand (ZAR) or Bitcoin (BTC), and complete the transaction.

Step 5: Transfer Bitcoin to a Secure Crypto Wallet (Optional)

While you can usually store your purchased Bitcoin on the exchange platform, it is recommended to transfer your digital assets to an external Bitcoin wallet for added security. Online platforms are vulnerable to hacking and cyber-attacks, so keeping your Bitcoin in a secure wallet gives you more peace of mind.

Before investing in Bitcoin with your credit or debit card, it is important to research market trends and understand the volatility and risks involved in crypto investments. Additionally, be sure to check the fees charged by the exchange for buying BTC and any future transaction fees when transferring coins between crypto wallets, as these may vary depending on the cryptocurrency.

Bitcoin ATMs

In South Africa, there are Bitcoin ATMs in Pretoria, Johannesburg, Cape Town, Durban, Port Elizabeth, Pietermaritzburg, and Stellenbosch. The number of Bitcoin ATMs in these cities varies, with Pretoria having the most at five, followed by Durban with three, and Cape Town and Johannesburg with two each.

Pretoria

• Saverite Florauna, Corner West and Brits Road
• Euro Mini Liquors, Brits Road
• Woodlands Boulevard Mall, Cnr Garsfontein Rd & De Villebois Mareuil Dr Pretorius Park, Pretoria East
• Two other ATMs are also located in Pretoria but their exact addresses are not provided in the sources.

Johannesburg

• Sandton City Mall, Sandton
• Lonehill Shopping Centre, Sandton
• The Cube, Bryanston

Cape Town

• 38 Wale Street (two ATMs at this address)
• AnkerPay, near the Waterfront
• Willow Bridge, Bellville

Durban

• Hillcrest Corner Mall
• WaterCrest Mall
• Westville Mall
• Umlazi Mega City
• Musgrave Centre

Pietermaritzburg

Liberty Midlands Mall, Woodlands Suburb

Port Elizabeth

Summerstrand Village Centre, Summerstrand

Stellenbosch

Eikstad Mall

When using a Bitcoin ATM, you can expect to pay high fees, typically between 8% and 10%. These fees are charged in addition to the prevailing Bitcoin exchange rate, which the ATM retrieves in real-time. Most machines have a transaction limit of ZAR 24,500, just under the exchange limit in South Africa of ZAR 25,000. For transactions above this amount, you will likely need to go through an identity verification process and report it to the Financial Intelligence Centre.

To buy Bitcoin at an ATM, you will need to choose the currency and amount, deposit cash, and then decide whether to transfer it to a wallet or process it as a paper transaction. If you choose to use a wallet, you will need to scan a QR code from your wallet app. If you opt for a paper transaction, the ATM will print out the details for retrieving your cryptocurrency purchase.

Selling Bitcoin via an ATM is less common and depends on the type of ATM and the system it operates on.

It is important to note that not all Bitcoin ATMs offer the same services or support the same cryptocurrencies. This is because they are owned and operated by private organisations that decide which services and coins/tokens to offer. Therefore, it is advisable to research a specific branded ATM before using it.

Bitcoin wallets

A Bitcoin wallet is a place to store your Bitcoin, allowing you to start transacting on the network. There are many different types of Bitcoin wallets, each with its own pros and cons.

Hot Wallets

Hot wallets are connected to the internet and are often free to use. They are considered less secure than cold wallets because they are more vulnerable to hackers. Examples of hot wallets include:

• Mobile wallets: These are convenient and ideal for making transactions face-to-face. They are designed to use QR codes to make transactions quick and seamless. However, they are susceptible to malware and the loss or damage of the device could lead to the loss of funds.
• Web wallets: These are accessible from any web browser and are compatible with most cryptocurrencies. They are susceptible to malware and are less secure than hardware wallets.

Cold Wallets

Cold wallets are not connected to the internet and are considered more secure than hot wallets. They are ideal for storing large amounts of Bitcoin. Examples of cold wallets include:

• Hardware wallets: These are physical devices that store your Bitcoin offline. They are considered one of the most secure ways to store your Bitcoin. However, they are less convenient for mobile use and can be difficult to use for scanning QR codes.
• Paper wallets: These are physical documents that contain the information necessary to generate your private keys. They are considered very secure since they are not connected to any digital network. However, they are susceptible to physical damage or loss.

When choosing a Bitcoin wallet, it is important to consider the level of security, ease of use, compatibility with different cryptocurrencies, and the level of control you have over your private keys. It is also important to back up your wallet and enable two-factor authentication for added security.

Bitcoin stocks

Active Trading

This strategy involves buying Bitcoin when the price is low and selling when the price is high. This approach requires a good understanding of the market and the ability to time your trades correctly. It can be profitable but also carries a high risk due to the volatility of Bitcoin prices.

Long-Term Investment

A long-term investment strategy involves buying and holding Bitcoin for several years, with the expectation that its value will increase over time. This approach removes the need to time the market and reduces the impact of short-term price fluctuations. However, it requires patience and a long-term commitment.

Investing in Blockchain Technology

Bitcoin is built on blockchain technology, and investing in companies that develop and apply blockchain technology can be a way to gain exposure to the growth of Bitcoin and other cryptocurrencies. These companies are working on the underlying infrastructure that supports Bitcoin and the broader cryptocurrency ecosystem.

Investing in Hardware Manufacturers

The process of mining Bitcoin requires specialised hardware, including powerful computers and processors. Investing in companies that manufacture and supply these components can be a way to benefit from the increasing demand for Bitcoin mining equipment.

Investing in the Bitcoin Economy

Another way to invest in Bitcoin indirectly is to support companies that facilitate the Bitcoin economy. This includes companies that provide Bitcoin wallets, exchanges, payment processors, and other services that support the use and adoption of Bitcoin. By investing in these companies, you are betting on the growth and mainstream adoption of Bitcoin.

Bitcoin Mining

Mining Bitcoin involves solving complex computational problems to validate transactions on the blockchain. Miners are rewarded with Bitcoin for their efforts. However, this method is complex and requires a deep understanding of the Bitcoin blockchain and access to significant computational resources.

In conclusion, investing in Bitcoin stocks in South Africa offers several opportunities, from active trading to long-term investments and supporting the broader Bitcoin ecosystem. It is important to remember that investing in Bitcoin and other cryptocurrencies carries a high level of risk due to their volatility and the potential for scams. Always do your own research and invest only what you can afford to lose.

Frequently asked questions