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A perfect storm has formed and the Rand continues its plummet.
The key factors contributing to the decline: a balance of trade deficit, poor economic data globally and a mining sector hit particularly hard by weak global resource markets.
South Africa, as one of the ‘BRICS’, was often touted as an emerging market to watch. These days it finds itself in less auspicious company; the so-called ‘Fragile Five’ (India, Indonesia, Brazil and Turkey).
The economic fundamentals are poor and citizens are left with few options. Most feel powerless. With few options available many are forced to watch their real wealth, denominated in Rand, evaporate.
But a group of tech savvy entrepreneurs and investors have had enough. They are bringing Bitcoin and digital currency to South Africans.
Driven by growing recognition and mainstream attention this investment option is catching on fast.
Gareth Grobler runs ice3x.com, a South African based Bitcoin exchange. Customers sign-up for an account on their web site and link it to their bank account. In minutes they are able to get rid of their Rand for Bitcoins.
Gareth says that “we’re seeing all kinds of people sign-up, dozens each day. Fom teenagers to people in their eighties: people from different backgrounds. They’ve heard of Bitcoin, they want to learn more and they just want to get rid of their Rand.”
Bitcoin first came to international prominence last year when some big names in finance threw their support behind it. Most notably major Silicon Valley Venture Capitalists such as the Winklevoss twins, of Facebook fame.
The price is known for its short-term volatility. But the long-term trend is up and so far this year it has remained incredibly stable.
The new currency is not without its detractors and its fair share of media attention: both positive and negative.
As Gareth of ice3x.com notes, “It’s only young and new and hasn’t necessarily proved itself as a store of value. But a lot of people all over the world are making money from it. We’re proud to give that opportunity to South Africans. And they are embracing it.”
Gareth is careful to point out that his company only provides a service. They do not give investment advice, although they believe in the technology, it is up to others to decide before they invest.
If the Rand continues its rapid decline, it seems likely that more people will turn to this new financial space, in an attempt to preserve wealth. At the very least that makes Bitcoin something to watch this year.
