60% of South Africans Are “Not Aware” of Cryptocurrencies, Study Shows

Francisco Memoria
  • A recently conducted survey shows most South Africans are "not aware" of cryptocurrencies like bitcoin.
  • It shows, however, that 38 percent of those who were aware wish they had invested in cryptocurrencies.

Financial services giant Old Mutual has recently published the 2018 Savings and Investment Monitor survey for South Africa, the continent’s second-biggest economy. Per its study, as much as 60 percent of South Africans revealed they’re unaware of cryptocurrencies.

About 19 percent of the country’s residents revealed they were aware of cryptocurrencies like bitcoin, but had “just heard about it.” 17 percent knew “a bit,” while only 4 percent showed they knew a lot about cryptos.

Respondents’ sentiments towards cryptocurrencies showed that 53 percent did “not understand how they work,” while 71 percent believe it’s possible to “make a lot of money” with them. About 38 percent of respondents who were aware of cryptos noted they wish they had invested in them before.

Notably, 43 percent likened cryptocurrencies to a pyramid scheme, a number that may be influenced by news that revealed the country’s authorities were investigating an $80 million bitcoin Ponzi scheme that collapsed after its founder disappeared.

Old Mutual’s survey comes little over a week after Google Trends data showed South Africa has the highest worldwide interest for bitcoin, the flagship cryptocurrency. As CryptoGlobe covered earlier this month, the country has a well-established legal framework that governs the financial services industry.

Regulators in the country are aware poor regulations may stifle innovation, and as such haven’t been taking an aggressive approach. In April, the country was set to establish a self-regulatory unit to oversee the industry. At the time the central bank’s Director of Banking Practice, Bridget King, stated:

“Regulating cryptocurrencies prematurely could have the negative consequence of throttling the growth and innovation of the industry”

Bridget King

Nevertheless, the South African Revenue Service (SARS) revealed through an official statement that normal tax rules apply to cryptocurrencies. While the organization sees them as intangible assets and not currencies, taxpayers are expected to declare gains.

Recent crypto-related developments in the country include the launch of crypto exchange SygniaCoin, which is set to allow users to purchase cryptos with the Rand, South Africa’s fiat currency, and to base its rules and regulations on exchanges in New York.

Another cryptocurrency exchange, Coindirect, also recently launched trading pairs between the Rand and various top cryptocurrencies, including bitcoin, bitcoin cash, ethereum, litecoin, and Ripple’s XRP.

Bitcoin Could Hit $349,000 by 2044 Thanks to Generational Wealth Transfer, Kraken Predicts

Francisco Memoria

The price of bitcoin could hit $349,000 by 2044 if millennials and generation Xers invest at least 5% of the wealth they inherit from Baby Boomers to invest in the flagship cryptocurrency.

According to a report published by the in-house research team of the cryptocurrency exchange, Kraken Intelligence, in the United States alone there will be a $70 trillion wealth transfer to the more bitcoin-friendly generations in the coming decades, which could significantly impact the price of bitcoin.

In the report, titled “Inheriting USDs & Acquiring BTCs: How ‘The Great Wealth Transfer’ Will Fuel ‘The Great Bitcoin Adoption’” Kraken shows tables assuming inheritance tax ranging from 1% to 5%, and the allocated wealth going into the cryptocurrency space going from 1% to 10%, and projects 70% of the $70 trillion wealth transfer “will occur in the next 10 years.”

The total amount going into the cryptocurrency space could, as such, be of $196 billion if the investment allocation is of 1% and the inheritance tax is of 5%, or of $1.9 trillion if the inheritance tax is of 1% and an investment allocation of 10%, the latter being the more aggressive assumption.

Assuming an inheritance tax of 2% and a 5% allocation, the implied price of bitcoin would be of $349,255 by 2044. This, if the assumed investment is of $971 billion. The more aggressive estimate, using a 1% tax and a 10% investment allocation, would see BTC hit $705,000. The more modest one, with higher tax and a lower allocation, would see it hit $67,713.

These estimates, Kraken adds, are notable as younger generations are more likely to invest in bitcoin. It cites a survey that saw 42% of respondents between 18-34 say they were likely going to buy bitcoin over the next five years, compared to 8% of those 65 and over.

As CryptoGlobe reported, a study conducted by brokerage giant Charles Schwab showed millennials have a higher holding in Grayscale’s Bitcoin Trust (GBTC) fund than in Netflix, Warren Buffet’s Berkshire Hathaway, Microsoft, and Alibaba.

Kraken’s report further noted that generation Xers may end up investing in bitcoin as they “value self-reliance” and “grew up with computers,” while millennials may invest because they prefer “tech products” and “transparency and mobility,” among other reasons. It’s worth noting volatile assets such as BTC may not be a good investment for people close to retirement.

Featured image via Unsplash.