The founders of South Africa’s first rand-to-Bitcoin exchange platform have told HumanIPO it is 300 times faster and 10 times cheaper than traditional money transfers.
Bitcoin is a digital currency which is not regulated or controlled by any government and exists purely in the cloud. It is described as a currency “without borders”.
In the past six months it has experienced rapid growth in the United States and Europe, where the Eurozone crisis has drained confidence in fiat currencies, but take-up has so far been slow in Africa.
In an exclusive interview with HumanIPO, South Africans Nicholas Pilkington and Timothy Stranex said when they realised Bitcoin was more than just another “get-rich-quick scheme” they began looking at it more closely and realised one of the problems they could solve was getting consumers’ hands on Bitcoins.
As a result the duo created BitX earlier this year. Traders can place bids to buy or sell and once there is a match a trade takes place.
Pilkington and Stranex said: “The platform is still very young, but we have seen steady growth since we launched.
“There are a number of traders who use the platform very frequently. We expect this growth to accelerate as Bitcoin becomes more accepted and understood in South Africa.
“We are continually working on making the platform easier to use while keeping it secure and robust. The feedback we have received from the community has been excellent.”
The team said while a traditional transfer between banks such as FNB and Standard Bank may take two working days, a Bitcoin transaction is cleared in 10 minutes./span>
Regarding cost, FNB charges ZAR7 (US$0.78) for a transfer, while the Bitcoin transaction fee is just ZAR0.7.
They added: “Another great thing about Bitcoin is that you can keep control of them yourself. It’s similar to gold in this respect. Nobody can take them from you without your consent and they can’t be devalued by a central bank.
“We think of Bitcoin as something between ‘Cash 2.0’ and ‘Krugerrand 2.0’.”
Critics of Bitcoin point to its rollercoaster value, which in April peaked at more than US$266 before plummeting US$160.
The most popular exchange site, Mt. Gox, has been the victim of a number of distributed denial of service (DDoS) attacks which have forced their system offline, and yesterday it was reported more than US$3,700 worth of Bitcoins had been illegally mined by a “rogue employee” of gaming company ESEA.
Regarding the fluctuating value, Pilkington and Stranex said: “We expect it’ll continue to fluctuate in the short term because the market is still small enough that it’s sensitive to media coverage and can be moved by large investors.
“However, it’ll become more stable over time as more professionals get involved and the market trading volume grows.”
To give perspective, the team said the daily trading volume between USD and Bitcoin was around US$5 million per day, compared to daily trading on global currency markets is around US$4 trillion.
HumanIPO will print the full Q&A with BitX next week.