While the rush to adopt crypto uses has resulted in a great deal of useless fluff and scams, hardcore advocates of the technology have pushed through to find serious and real-world applications.

The sector itself is seeing increasingly rapid adoption, outpacing the adoption of previous tech revolutions such as the internet or mobile phones, according to BlackRock’s recent digital assets conference.

South Africa as a whole is now in the top 15 states by use of crypto technology per capita, and the Cape appears to be developing into something of a regional hub, as the network of developers has reached a higher density than anywhere else in the country.

Several projects which are currently not yet open to the public aspire to some really high ambitions, including developing new international payments systems.

With Pick ‘n Pay already generating a R1 million a month from crypto-based purchases, the population seems to be on a steep adoption curve.

The Western Cape government has focused on facilitating local startups in the tech sector, but is mostly focused on pushing innovation in industrial and infrastructural controllers (“internet of things” or IoT), AI, population monitoring (“smart city” stuff), and entertainment.

But Financial technology remains a key area of innovation which, unfortunately for political planners, doesn’t really involve or benefit them, and is focused rather on circumventing them.

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MoneyBadger and Luno

Cryptocurrency exchange Luno, whose co-founder also worked on Snapscan at various stages of development, have broadened their reach by creating several payment platforms for real-world trading.

In Stellenbosch, Carel van Wyk, founding member of major Cape Town-based crypto exchange Luno, has also started work on a platform known as MoneyBadger, based in Stellenbosch. The platform aims to link up local retailers with a payment system that will make it easier to buy and sell goods in cryptocurrency.

MoneyBadger, a new tech startup from Stellenbosch, aims to capitalise on this enthusiasm by facilitating easy, low-cost payments through already existing apps, like Binance, Valar, Luno, or any BTC-enabled Lightning wallet, which enables instant transactions. The company’s software integrates effortlessly with existing point-of-sale systems and e-commerce checkout services, offering a streamlined experience for businesses and consumers alike.

Their API is compatible with almost any programming language, platform, or framework, and provides plugins for major e-commerce platforms, bypassing the need for additional hardware, unlike traditional competitors such as Yoco.

As co-founder of the most popular South African cryptocurrency exchange, Luno and now co-founder and CEO of MoneyBadger, Carel van Wyk, told us for a previous article:

"Money Badger enables a next generation of tech savvy shoppers, and there are around 6 million of these consumers. 66% of them want to spend the cryptocurrency they own in ordinary transactions, but at the moment they don't really have a lot of options. What we're also hoping to do with MoneyBadger is to give businesses and consumers the opportunity to save and spend money in an anti-inflationary currency. Bitcoin is the big one in that category."

Luno has already made headway in this market through a partnership with Zapper, which now allows users to transact in crypto at 31 000 merchants nationwide, including companies like FlySafair, fuel stations, and educational institutions. Payments can be made via the Luno Pay app wherever Zapper QR codes are available, for transactions up to R100,000.

This development marks a notable expansion from Luno’s initial crypto-enabled payments at Pick n Pay to a broader array of businesses, including fuel stations, educational institutions, and parking facilities.

VALR, a rival crypto exchange based in Johannesburg, now supports 11 cryptocurrencies on their Geewiz e-commerce platform.

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Airbtc

Airbtc, a property listing service akin to Airbnb, distinguishes itself by transacting solely in Bitcoin, without any connection to fiat currency or the traditional banking sector. It is a venture designed by and for Bitcoin enthusiasts, with a firm commitment never to accept fiat money or any other cryptocurrency.

Airbtc sets itself apart from platforms that facilitate bitcoin or cryptocurrency payments but ultimately convert them into fiat for transactions. While such services contribute to Bitcoin’s mainstream adoption, they largely serve as on- and off-ramps to the fiat economy, doing little to promote a truly circular Bitcoin ecosystem.

The business model is straightforward: hosts list their properties on their site, and guests book accommodation through the platform. Airbtc holds the guest’s funds in escrow, releasing payment to the host only once the stay is complete.

Both hosts and guests can expect a high level of personal service, with a focus on providing an exceptional user experience. This emphasis on quality service reflects our commitment to building a platform that caters to the needs of the Bitcoin community.

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Bitcoin Ekasi

A major member of this group is the project of Hermann Vivier, the founder of Bitcoin Ekasi, which aims to use the currency as a way to build a circular economy in the informal sector, starting in the Cape.

This exploits the benefits of crypto, but also takes advantage of the features of traditional microcurrency projects, such as Orania’s local currency, the Ora, as well as several examples in parts of Germany, where the issuing of a local currency token creates a soft barrier to the flow of money out of the community, and slows down the flow, much like a beaver dam can spread the green band around a point in a river by broadening and slowing the flow.

Bitcoin Ekasi is in Mossel Bay, South Africa, and draws inspiration from Bitcoin Beach in El Zonte, El Salvador. It is an initiative of The Surfer Kids, a non-profit organization founded in 2010 to empower youth in an impoverished township. Like Bitcoin Beach, Bitcoin Ekasi aims to create a Bitcoin-based economy within the community served by the non-profit.

The Surfer Kids operates five days a week, year-round, and employs coaches from the township. Through Bitcoin Ekasi, these coaches are paid in Bitcoin, while local vendors are encouraged to accept the cryptocurrency for transactions. This enables coaches to spend their earnings within the community, thus gradually embedding Bitcoin into the local economy. The transactions are facilitated via the Lightning Network, Bitcoin's layer-two scaling solution, allowing for faster, cheaper payments.

While the project may seem somewhat sentimental on the surface, increasing lower-market adoption is vital to the broader utility of the payment method for related products, such as those mentioned above. Informal businesses occupy a significant portion of the economy, and seldom enjoy paying taxes on their earnings, but are made vulnerable through the use of cash.

These traders often earn middle-class incomes, which can be spent at more conventional retail outlets, such as are increasingly adopting blockchain payment mechanisms like those mentioned above.

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Cape Town as a node in the crypto community

All of the above projects (as well as some more adventurous ones) are partners at Adopting Bitcoin, an annual international networking event with branches in the Cape Town, the Netherlands and El Salvador. The organisation frames their push for adoption in the context of the crumbling South African state, and El Salvador’s use of BTC for national reserves. The common members across each branch include several South Africans.

These developments reflect broader trends in South Africa’s crypto landscape. A report by Chainalysis in October 2024 highlighted that South Africa, the continent's largest economy, received $26 billion in crypto value over the past year. Notably, the use of stablecoins on local exchanges has seen month-on-month growth of over 50%, driven by demand for digital financial solutions.

Cape Town has emerged as a key crypto hub in Africa, hosting prominent conferences such as Adopting Bitcoin in January and Crypto Fest Cryptopia in November. The city also held its first ETH CapeTown hackathon in 2019, further cementing its position in the global crypto scene.

Cape Town is home to three major cryptocurrency exchanges: OVEX, Luno, and Circle-backed VALR. According to van der Spuy, South African exchanges often present arbitrage opportunities compared to international platforms, with crypto price differences ranging from 0.5% to 3.6%.

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Institutional reactions

The rise of cryptocurrency in South Africa could catalyse economic growth and innovation, particularly in fintech and crypto-based solutions, enhancing the country’s position as a tech hub. It also presents opportunities to empower the unbanked population, offering access to financial services via mobile devices. Additionally, increased use of crypto is expected to drive financial literacy, with more South Africans becoming familiar with digital assets and blockchain technology.

As regulatory frameworks evolve, South Africa’s Financial Sector Conduct Authority (FSCA) has provided clarity by classifying crypto assets as financial products, fostering responsible growth in the sector, but they are largely apprehensive about the potential, considering our large black and grey markets.

Bitcoin and other cryptocurrencies often trade at a higher price than on foreign exchanges. This price discrepancy is largely driven by South Africa’s stringent regulatory controls on international money transfers, aimed at curbing capital flight from the rand-based system.

But these developments come as South Africa’s tax authority, the South African Revenue Service (SARS), ramps up efforts to ensure tax compliance within the growing crypto sector. Legal experts from Webber Wentzel report that crypto traders have been receiving notices that their tax affairs are under review, based on data shared by licensed exchanges. SARS has warned that failure to comply could result in criminal charges.

SARS has begun using strange methods such as artificial intelligence to identify non-compliant traders, which raises questions about the methodology for ascertaining what one really owes, since AI systems are often extremely opaque, even to their own creators.

But whatever the long term outcome of this arms race, it seems to certainly to be getting interesting.

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