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The constant fluctuation in the price of bitcoin and other cryptocurrencies won’t affect SA bitcoin exchange Luno and how it operates, says the company’s SA country manager Marius Reitz.
Reitz (pictured above) was speaking to Ventureburn last Thursday (29 November), a day after the price of Bitcoin jumped back by about 15% (over the previous day) to $4300.
In the preceding week bitcoin declined by 35% in seven days, leading to the price of the digital currency being pegged at below $3500 in what CNBC reported as a 14-month low.
Luno facilitates bitcoin storage and transactions through its bitcoin wallet service.
“A 10%, 20% drop in the crypto price is not changing our business model, priorities or anything like that,” stressed Reitz.
‘During times of price volatility, whether its increases or decreases we generally see increases in trading’ – Luno SA country manager Marius Reitz
When asked to explain what was causing the fluctuation, Reitz explained that although the startup does keep tabs on price movements, it generally does not comment on price movements.
“It’s almost like taking a shot in the dark because you don’t really know. But what I can say is that Bitcoin is a new technology and we will go through price fluctuations,” he said.
But he pointed out that were one to look back to the past five years, the price drop that Bitcoin has undergone in the past weeks is “completely in-line with past price movements”.
Reitz however acknowledged that the Bitcoin price determines volumes on exchanges and that it also “to some extent” introduces people to cryptocurrency because of speculation and what he terms the “greed factor”.
However, he pointed out that a survey of 1200 South Africans that the startup commissioned Cantor TNS to carry out earlier this year, revealed that 83% of respondents had bought cryptocurrency for investment purposes.
“So, investment at this at this stage is still the predominant use case and not payments,” he said. On the other hand 35% of the respondents said they use cryptocurrency for online ecommerce payments.
How then does this influence how Luno’s customers use bitcoin and other cryptocurrency?
“The payments use case during time of price drops won’t be that strong because people will lose value. The trading use case then comes to the fore because a sub-section of our customers trade cryptocurrency on a daily basis” he pointed out.
Said Reitz: “During times of price volatility, whether its increases or decreases we generally see increases in trading”.
Featured image: Marius Reitz Luno country manager for South Africa