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IN THE SERENE LANDSCAPES OF THE SOUTH CAPE, A HANDFUL OF ENTREPRENEURS HAVE SEEN AN OPPORTUNITY TO RESHAPE LOCAL ECONOMIES AND EMPOWER COMMUNITIES BY ADOPTING BITCOIN. WHAT STARTED AS A SMALL COMMUNITY PROJECT IS TRANSFORMING THE WAY THAT PEOPLE VIEW MONEY.
Spearheaded by a couple of ambitious initiatives, such as Bitcoin Ekasi, Bitcoin Ubuntu, and Bitcoin Witsand, the South Cape is set to develop into a pioneering hub for decentralised finance in Africa. However, many people are still unsure how this initiative began, or how exactly a decentralised payment solution will benefit South Africans.
HOW DOES BITCOIN PAYMENT WORK?
We’ve all heard about Bitcoin by now. The Bitcoin payment system operates on the principles of decentralisation and cryptographic technology, enabling peer-to-peer transactions without the need for intermediaries like banks or governments. Users store their Bitcoin in digital wallets, each identified by a unique address. To make a payment, the sender initiates a transaction by digitally signing it with their private key, specifying the recipient’s address and the amount of Bitcoin to transfer.
This transaction is broadcast to the decentralised network of computers, known as nodes, which validate and record it on a public ledger called the blockchain through a process known as mining. Miners compete to solve complex mathematical puzzles, adding new blocks of transactions to the blockchain in a secure and immutable manner. Once confirmed, the transaction becomes irreversible, and the recipient gains ownership of the transferred Bitcoin. This system ensures transparency, security, and censorship resistance, empowering users to conduct borderless and permissionless financial transactions.
To make this more digestible, it is good to note that transactions are often denominated and conducted in Satoshi (SATS), which represents a smaller unit of Bitcoin. Named after the eponymous creator of Bitcoin, Satoshi Nakamoto, one Bitcoin is divisible into 100 million satoshis. This granularity allows for microtransactions and facilitates the use of Bitcoin in the everyday purchases of goods, enabling individuals to transact in smaller increments of value. SATS serve as a practical means of exchange within the Bitcoin ecosystem, offering flexibility and accessibility in conducting transactions across various economic activities.
GRASSROOTS INITIATIVES THAT EMPOWER TOWNSHIP COMMUNITIES
Most of the groundwork was done by Bitcoin Ekasi, an initiative that morphed out of a non-profit called The Surfer Kids in Mossel Bay. This organisation aims to empower children from impoverished townships through surfing and Bitcoin education. By leveraging Bitcoin donations and educating coaches, they have onboarded 15 corner shops to accept Bitcoin payments, illustrating its potential as a tangible currency convertible into fiat and capable of facilitating real-world transactions, from purchasing essentials to topping up mobile cards and paying for electricity.
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Hermann Vivier, a co-founder of Bitcoin Ekasi, explained that the notion of digital payment was initially met with scepticism, but Bitcoin adoption gained momentum as residents recognised its utility and accessibility. Vivier emphasised that the project’s focus is on empowering locals by providing them with a permissionless form of sound money that grows in value rather than eroding away due to inflation.
BEYOND TOWNSHIP BOUNDARIES AND WIDENING ADOPTION
While Bitcoin adoption initially centered on empowering township communities in Mossel Bay, its reach has extended to encompass a broader demographic. This was evidenced by the formation of Bitcoin Ubuntu by Glenn Jooste in Swellendam, and Bitcoin Witsand by Edwin Jones, a specialist programmer who moved to the area a couple of years ago.
Edwin was captivated by the opportunities that Bitcoin Ekasi and Bitcoin Ubuntu offered the community and endeavoured to pursue a local Bitcoin economy where it would be the preferred tender in town.
‘It really started taking off in 2022, which is when there was a major global shift towards understanding blockchain technology,’ explains Edwin. ‘In Witsand, the pressure came from the local business owners who were curious about Bitcoin and were looking for a technical solution to use in their businesses or shops as a means of trading.’
With a population of around 600 people, this scenic coastal village was the perfect setting to test the full extent of how adoption and day-to-day trade would operate in a community. Through clever marketing and constant education, they began onboarding businesses. Many shops in town already accept and even prefer Bitcoin tender.
The biggest drawback is a lack of knowledge. Edwin admits that getting people to understand and appreciate the intricate and more technical aspects of Bitcoin payment takes time. However, the fact that major supermarket chains and other businesses are catching on means that there is an increased awareness that is sure to pique the interest of those who have been following the digital or cryptocurrency trends.
Vivier notes the growing adoption of Bitcoin by businesses and larger forms of trade, citing the example of Pick n Pay, which now accepts Bitcoin at its outlets nationwide. Edwin has seen a positive response from tourists who are familiar with blockchain tech.
THE FUTURE OF BITCOIN IN THE SOUTH CAPE
Looking ahead, Vivier offers a compelling perspective on the future of Bitcoin in the area. He underscores South Africa’s susceptibility to economic instability, driven by government mismanagement and escalating inflation. Against this backdrop, Bitcoin emerges as a superior store of value, offering respite from currency devaluation and political uncertainty.
Back in 2018, real estate agents and property developers in England and America were already accepting Bitcoin as a legitimate payment option for homeowners. Vivier and Jones both anticipate a similar paradigm shift in investment patterns for South Africa, with Bitcoin gradually supplanting traditional assets such as property and gold. As the understanding of Bitcoin’s network mechanics deepens, more individuals and businesses are likely to embrace digital currency as a hedge against economic volatility, which means that it could become a preferred method of payment, not just when buying daily necessities but for all forms of trade.
