Cryptocurrency is a hot topic and the talking point on everyone’s lips. Bitcoin has existed for a few years but is starting to make its way into the mainstream market. In South Africa, ecommerce giants Raru and Takealot has been some of the first major retailers to accept bitcoin as a payment method via payment gateway, PayFast.
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Launched this week, BitHub is a new space geared towards digital currency innovation based in Woodstock, Cape Town. According to Ian Merrington, CEO of CiTi, one of BitHub’s goals the incubation of cryptocurrency startups. One of the ideas is to line up innovators with banks while it’s currently in talks with Barclays to create a fittech hub at the Bandwidth Barn, and to foster cryptocurrency development.
BitHub hasn’t just been created to facilitate startups. The organisation is also a physical space — at the Bandwidth Barn — for talks and forums. They take the time to create a 12-month timetable for events that are interesting to bitcoin. They also want to create awareness among developers and those who don’t know anything about bitcoin and crypto currencies.
Recently, there has been a surge in startups adopting bitcoin for various uses. One of these is BitPesa, a Kenyan company focusing on instant trading. BitPesa uses bitcoin as a vehicle for currency transactions, due to its exceptionally low transaction fees. Currency can then be transferred in and out of your BitPesa account to the currency of your choice.
Merrington gives the example of using it for title deeds. This can be beneficial for those outside of the banking system as the currency can be traced all the way back to its origin. There are other uses, such as anti-piracy measures and utility meters.
The digital currency still has its problems, for example, it’s seen as an anarchist currency existing outside of the standard banking system. At times, it is also volatile in its worth, but so are most currencies, like our own South African rand.
One of the pros to bitcoin is its “bulletproof” creation. Built on algorithms, bitcoin uses a blockchain model, which cannot be frauded. This is in part due to the number of bitcoin transactions that can be processed per second, which sits at nine. There are discussions around increasing this number to enable scalability for the currency’s growth. Other attractive attributes include peer-to-peer transaction processing, anonymity from traditional banking systems, and it is self-policing.
Image: By Zach Copley via Flickr