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BitHub brings digital currency to South Africa

19 June 2015

South Africa's first digital currency incubator and hub is up and running in the form of BitHub, headquartered at the Bandwidth Barn in Woodstock, Cape Town.

A cross section of traders, consumers, tech geeks and bitcoin enthusiasts were at the launch. Together they created an atmosphere of optimism and excitement at the potential of digital currency across all levels of commerce and tech.

Speaking at the event, Joshin Raghubar, the chairman of the Bandwidth Barn, said: "We are entering into a new age in banking and finance and are in need of a platform and community for innovation within this space. BitHub aims to amplify the community of development in digital currency, and this launch event, focusing on the payment space of digital currency, forms a great segway to greater innovation within digital currency."

Financial technology

Ian Merrington, the chief executive of the Cape Innovation and Technology Initiative (Citi), added: "We've been looking at the fintech space for a while, and the recent Bitcoin Conference lit a spark that we are excited to take further. Here is a platform that has potential for disruptive innovation that can solve Africa-specific needs, serve the unbanked, and also play a transformative role."

The formal banking sector was showing a keen interest in the digital currency and innovation space.

"That's why BitHub's launch is timeous and vital," he said. "Now there is a place to gather, to learn, to innovate; a community where digital currency entrepreneurs and developers can meet, swap ideas and solve problems. Citi is geared to help unblock constraints, backed by a business-friendly local government.

Learn how bitcoin works:

Legislation

"We recognise that there are several challenges to overcome. Legislation around fintech needs to change, educating consumers and merchants on the philosophy and principles of digital currency, and an immature infrastructure, to name a few.

"But there are also amazing opportunities; big banking is starting to invest in fintech development, we can unleash the Western Cape as a frontrunner in the development of fintech, and create awareness and positive discussion around the social impact offered by this technology through its open protocol."

Roslyn Lavers, the business development manager at PayFast, the payments processing service for South African websites, spoke about trends merchants such as Takealot, which accepted bitcoin, were experiencing.

"In July 2014, PayFast's decision to allow buyers to accept payment with bitcoin was largely exploratory, but we have been surprised by how much it is actually being used. The first week we saw payments totalling R50 000, and since then a steady trade value has been maintained.

"Now we have in excess of 30 000 merchants that have bitcoin enabled, with the current trend being tech merchants embracing the bitcoin payments, and coffee and beer merchants following close behind."

Early adopters

However, it was still early days for bitcoin use in South Africa. "Early adopters are using this, and are using it consistently, which is a good sign, and has exceeded our expectations."

Francois Paul, a developer from BitX, a global bitcoin wallet, exchange and merchant service, explained why bitcoin was better than traditional payment methods.

"Bitcoin allows for free flow of value, without a trust element in the equation," he said. "It is a digital asset that cannot be copied, that has no counterparty risk and no charge back – it is not reversible. So the potential for fraud and scams is eliminated. It is borderless, fast, cheap and easy, and once people realise how easy it is to use, and the saving on transactional fees, consumer demand will spark a merchant response."

In South Africa, Landmark Computers was the first seller to accept bitcoin. Its chief executive, Andrew van der Nest said there was no risk and the network was incredibly safe.

"We have had no issues with bitcoin as a merchant; the money is guaranteed in our account and cannot be reversed. Plus we love how ownership, control and responsibility are now absolutely in the hands of the end user, where traditionally it is the bank or merchant's responsibility. Times are changing and we are changing with it."

Regarding education and legislation, Enrico Calandro from Research ICT Africa called on governments to become involved. "Digital currencies benefit the people, especially the poor, due to the low fees synonymous with virtual currency, and the ease of access thanks to smart phones."

Developers sought

In closing, Merrington called on developers and entrepreneurs to participate in the growth of the technology. "We want to create a stronger community by collaborating with established players and incubating and supporting new ideas in this space."

BitHub will host regular workshops and events on digital currency and fintech innovation.

Citi was established in 1998 to develop Cape Town and the region as a global technology cluster and hub for innovation that is a significant contributor to economic growth. It has become a blueprint for industry and public sector collaboration models for sector development.

The Bandwidth Barn, a Citi operated initiative, has been recognised as Africa's leading and most established incubator and accelerator. It also offers shared office space for entrepreneurs.

Source: BitHub