Everything you need to know about the South African cryptocurrency ecosystem

vjkombajn via Pixabay

While things may have quietened down on the crypto front after 2018’s massive fall in the price of Bitcoin, there’s still significant interest from entrepreneurs and investors in cryptocurrencies.

With this in mind, Ventureburn brings you a listing on where to go to get help if you want to invest in, build or simply know more about cryptocurrency in South Africa.

While South Africa does not currently regulate cryptocurrencies, the Reserve Bank’s position on virtual currencies is set out in the Position Paper on Virtual Currencies issued in 2014.

The bank has a dedicated fintech programme to increase focus and assist the existing working groups to research and analyse technology innovations in the financial services industry. Part of the review is aimed at assessing the impact on cross border financial flows and stability of the financial system (read more here).

As part of its first steps to regulate crypto assets such as Bitcoin and Ethereum, the SA Reserve Bank in January 2019 released a consultation paper on crypto assets for public comment (see a PDF copy here).

To gain a better understanding on cryptocurrency see this basic guide from The Wired or this one by Blockgeeks, as well as one by Coin Desk. On more on such things as how to get started investing in Bitcoin in South Africa check out Bitcoinzar.

Cryptocurrency exchanges

There are a number of South African platforms that sell and buy Bitcoin and other cryptocurrencies. Two of the most reputable are Luno and iceCUBED.

Luno allows users to buy and sell digital currencies such as Bitcoin. In September 2017 the startup received a R120-million injection in a funding round lead by London-based venture capital firm Balderton Capital. Rand Merchant Investments, through its fintech investment arm, AlphaCode, and existing investors Digital Currency Group also participated in the round. The platform also announced its expansion into 35 new markets across Europe. The announcement follows Luno’s R60-million Series-A round in 2015.

iceCUBED offers Bitcoin and Litecoin trading to South Africans, Nigerians and more. The platform is perhaps one of the few local exchanges trading the Ethereum currency.

DoshEx launched a cryptocurrency exchange platform in August 2018 that aims to help those it helps develop cryptocurrency and blockchain solutions to buy and sell digital tokens and claims to have already done work for Virgin Money SA (see this story).

Silicon Valley based SA entrepreneur Vinny Lingham announced in March 2019 that he had invested an undisclosed sum in Ovex, a Cape Town based cryptocurrency exchange, through his VC firm Newtown Partners (see this story).

The Ovex deal is the fourth in 2019 involving a SA crypto trading platform. In March 2019 VALR announced that it has raised $1.5-million in a seed round led by US crypto exchange Bittrex (see here). In February 2019 Coindirect and Revix raised €1-million and R11-million, respectively (see here and here).

Price indexes

There are a number of cryptocurrency price indices. Two of the more well-known ones are The World Coin Index and Brave New Coin.

The World Coin Index sources price information and news on over 400 cryptocurrencies The platform is connected to more than 35 cryptocurrency exchanges.

Brave New Coin is a blockchain and digital currency market data company that publishes technical analysis and research. The platform tracks over 300 tokens in real-time to produce API’s and blockchain data tools for developers, traders and enterprise.

Initial coin offerings

China’s ban in September 2017 on initial coin offerings (ICOs) has led to renewed concerns over the use of cryptocurrencies. In addition, in the first half of 2018 with the steady fall in the price of Bitcoin and Ethereum fewer local startups were opting to run ICOs (see this story).

In South Africa, cryptocurrencies are not guaranteed by the SA Reserve Bank, hence the bank offers no recourse or protection to consumers that participate in these. Read more here. A number of ICOs have taken place in South Africa of recent. However, data on the exact number of ICOs is hard to come by, as there is no central repository of ICOs and no requirement to report these to authorities as yet.

Newtown Partners ran two ICOs in 2017 — including one in June 2017 for Silicon Valley based SA entrepreneur Vinny Lingham’s company Civic which raised $33-million (read more here) and another to fund the Augmentors game, which allows those that play the game a chance to buy rare creatures using in-game currency. In October 2017 the investment firm announced that it would back a crowdfunding token sale of Dala, a new financial services utility token, on behalf of SA fintech startup Wala. The sale aims to be run from December 1 to 11 and aims to crowdfund more than $30-million.

South African startup ProsperiProp in 2017 ran an ICO aimed largely at international investors looking to invest in international property, utilising a cryptocurrency created by the company called “PROPX” (read more here). In October 2017, following the poor performance of its ICO, the startup added a new offering (Nanochain PROPX) which will allow investors to invest in software that will help financial institutions to offer property investment products via the blockchain.

The Sun Exchange, a blockchain-based solar micro-leasing marketplace, concluded an ICO on 31 December 2018, having raised just over $1-million, just 20% of its targeted raise of $5.4-million. The ICO for its Sunex Token will allow investors to earn an income off small solar projects that the startup manages. It attributed not having achieved the targeted raise of $5.4-million to the recent turbulent ICO market (see this story).

Crypto investment platforms

A number of cryptocurrency investment platforms have sprung up in SA. These include Bitfund, which claimed in July 2018 to have had “hundreds” of investors sign up since its launch in the same month (see this story). The founders of the Joburg-based startup claim that the new platform gives investors exposure to index portfolios of more than 20 of the largest cryptocurrencies.

SA startup Revix revealed in March 2019 that it had secured R11-million from a Johannesburg Stock Exchange (JSE) listed firm and is set to go live with its crypto-trading platform soon. The platform — which will target retail and institutional investors –will allow investors to invest in among other things, token offerings that are backed by real world assets such as wine or marijuana even (see this story)

Incubators and accelerators

European accelerator programme Startupbootcamp hosts an annual showcase where startups are given an opportunity to present their insurance technology related business idea to the Startupbootcamp InsurTech team and industry experts. FastTrack sessions are open to innovative early stage startups specialising in insurance related areas which include blockchain.

The 13-week Barclays Accelerator, which is aimed at fintech startups is run at the Rise fintech innovation hub in Woodstock, Cape Town. The programme will fund up to $45 000 per startup and takes  a six to eight percent equity share. It sees fintech companies follow a growth acceleration curriculum designed by Techstars, which has supported more than 900 technology startups across 23 cities around the world. See more here and a list of the 2017 participants here.

Joburg hub Blockstarters in June 2018 announced that it was looking to raise $450 000 to help fund business support services for at least eight blockchain startups. The hub officially launched in June 2018. At the time it had been assisting seven blockchain startups, including Zimbabwean crypto exchange Golix.

Johannesburg based DoshEx launched an exchange platform in August 2018 that aims to assist those it helps develop cryptocurrency and blockchain solutions to buy and sell digital tokens. The platform’s founder  claims to have already done work for Virgin Money SA. In early 2018 the startup secured an undisclosed investment from SA angel investors based in Australia in return for a 20% stake in the company.

Events and courses

The annual Blockchain Africa Conference is run by Bitcoin Events, founded in 2014 by The Blockchain Academy’s Sonya Kuhnel and Theo Sauls. Bitcoin Events hosted its inaugural Bitcoin Africa Conference in Cape Town in 2015. The next conference is scheduled to take place in March 2018 in Johannesburg. There are a number of other regular events on cryptocurrency. These include Bitcoin Cape Town, a Meetup.com group with over 600 members that holds discussions on cryptocurrencies.

The Blockchain Academy, founded by Sonya Kuhnel, provides training on the ins and outs of blockchain technology, in both Cape Town and Sandton, via the Bandwidth Barn and AlphaCode Club respectively. In addition Alphacode, a Johannesburg club for fintech startups, runs both an advanced and introductory course on blockchain. The Gordon Institute of Business Science (GIBS) also runs a blockchain and alternative finance course, as does online education platform Getsmarter.

Tari Labs, a contributor to SA-based blockchain protocol Tari, launched Tari Labs University — a free online university in 2018 to help incubate open-source projects and train blockchain developers, both locally and globally (see this story).

Cryptocurrency news

There are a number of news site that cover cryptocurrencies. In Africa there is Bitcoin Hub, a South African news site, while Bitcoin Africa covers the whole of Africa. For international news and views check out New York based Coindesk which claims to reach over 5 million unique visitors and Cointelegraph, a US online news site that has been covering cryptocurrency since 2013. The latter site has a US, Serbian, Japanese, Spanish and Brazilian version.

Experts to follow

Silicon Valley based SA entrepreneur Vinny Lingham – who is also the co-founder of Newtown Partners – often comments on cryptocurrency. Follow Lingham at @VinnyLingham. The Bitcoin Foundation is a US non-profit corporation. It was founded in 2012 with the stated mission to “standardize, protect and promote the use of Bitcoin cryptographic money for the benefit of users worldwide.” Lorien Gamaroff (@gamaroff) founded his consultancy Bankymoon in 2015 and has been involved in a number of blockchain proof of concepts.

SA startups using cryptocurrencies

Stellenbosch based Custos Media Technologies embeds Bitcoin tech in screener or review copies of video content, allowing studios to track infringers and fight piracy. Downloaders can claim a bounty if they ID other pirates. The tracking technology has been applied to both movies and ebooks. The company announced a deal with the Technology Innovation Agency in 2016. In September 2017 the startup announced its participation in a new blockchain-based anti-piracy solution for ebooks.

Another Stellenbosch based startup, The Sun Exchange ordinary people to purchase solar panels using a “blockchain-based” payment system, with Bitcoin. In October 2017 the startup announced that it had raised $1.6-million from a number of strategic partners to enable it to fund a planned initial coin offering (ICO). Read more here. It concluded an ICO on 31 December 2018, having raised just over $1-million, just 20% of its targeted raise of $5.4-million. The ICO for its Sunex Token will allow investors to earn an income off small solar projects that the startup manages.

Bankymoon introduced a blockchain-enabled electricity meter, allowing people to pay for utilities with Bitcoin. The service has also delivered these meters to needy schools, allowing anyone around the world to pay for their electricity with cryptocurrency. See this earlier story here.

Centbee is a Bitcoin wallet which provides merchants with a QR code that Bitcoin holders can scan using their smartphone to make payments. One of the founders is Lorien Gamaroff of Bankymoon. In late 2018 the startup announced the launch of the beta version of a bitcoin cash wallet that makes it easy to send bitcoin cash to friends (see this story). The news follows Centbee’s announcement in January that the startup had received an undisclosed amount in equity investment from blockchain research and development firm nChain Group.

Ubu aims to provide a basic universal income for all using cryptocurrency (see the White Paper here — downloads as a PDF). In simple terms it acts as kind of Groupon for businesses looking to promote products and services to customers registered with its app. Using the Ubu token, users that are registered on the platform can purchase products and services from those vendors signed up. Once registered, users will get 100 Ubu’s tokens for free every day “for perpetuity”. In so doing, the service provides a universal basic income for all those signed up (see this story).

This directory was first published on 30 November 2017 and was last updated on 9 April 2019.

Featured image: vjkombajn via Pixabay

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