How to Buy Bitcoin in South Africa
In recent years, it’s been impossible to read an article about investments that doesn’t mention cryptocurrencies, particularly Bitcoin. Whether recommend or criticize it, it’s impossible to ignore the amazing returns on investment that bitcoin has recorded so far.
For those jumping in, plenty of guides have been written about the process – however, most of them tend to be US and Europe-centric, and thus their processes don’t quite work for people in other countries. Today, we’d like to focus on how to buy bitcoin in South Africa.
First things first: What is Bitcoin?
For those out of the loop, or those who might have heard, but never quite understood Bitcoin, here is an introduction. Bitcoin is the first cryptocurrency to be released using blockchain technology – and in fact, the very first public implementation of it.
A cryptocurrency is a type of money (hence the word “currency”) that’s digital only, and whose validity and security are backed by complex computational algorithms. This makes the currency impossible to fake, unlike fiat currencies, its inherent circulation limitation, and predictable, algorithmic mode of coin creation that is hard for fakers to recreate.
While Bitcoin was first launched in 2009, it only gained widespread recognition in the latter half of the last decade, as the price for each token, that once sold at under $1, skyrocketed above $10,000 (and earlier this year, above $50,000.) This has turned the token into a hot commodity to invest in, with people and companies using it to safeguard the value of their existing assets vs inflation and to try their luck at getting rich quickly.
Will Bitcoin’s Price Keep Performing Well?
Nobody can know what will happen. What we do know, however, is that the crypto scene is fickle and extremely volatile.
Bitcoin is the crown jewel of cryptocurrencies, with its value so far always being higher than that of any other token. That’s not expected to change soon. What can change is the price itself, as the price history has shown in the last five years.
Although cryptocurrencies already saw a crash in May 2021, currently many economists are warning of an incoming general market downturn thanks to the resurgence of COVID in many countries along with the high leverage the crypto market has. This may or not happen – as economists also don’t know for sure what will happen – but in the short-term, Bitcoin price can rise or drop, but the long term favors a surge.
A price drop won’t be permanent, however. The crypto scene, and Bitcoin particularly, has gone through constant ups and downs, and if anything, a market crash in the near future would be a perfect opportunity for an investor to jump in – buying low so they can later sell high. There is still a lot of hype around this digital hold, and that hype might translate as great performance.
How can I buy Bitcoin?
As a virtual currency, you can’t just walk into your nearest Western Union and perform a currency exchange with any cryptocurrency. Instead, Bitcoin is bought primarily through cryptocurrency exchanges and brokers. Some financial trading platforms like eToro have also started offering the currency, but usually only as an investment option – while you can “buy” bitcoin from them, you can’t actually withdraw the cryptocurrency. Instead, you can only cash out, getting the fiat equivalent of its value.
The vast majority of Bitcoin purchases and sales happen through crypto exchanges, which facilitate transactions between parties by presenting a hub where you can buy and sell crypto. Regardless of how they work – whether as brokers or p2p – they allow people to buy, sell, and trade cryptocurrencies instantly.
Bitcoin Exchanges, and How to Use Them
Coinmama isn’t the largest exchange out there, nor is it the most publicized. It has, however, been in the market for many years, it’s considered trustable and… it accepts credit card purchases.
That last part is key, because with cryptocurrency, it’s really difficult to find reputable exchanges that will take anything other than bank transfers – and even then, many exchanges support just crypto to crypto transactions.
- Coinmama Account Opening Requirements
To register on Coinmama, all you need is an email, a password, and a full name. It’s a quick and simple process, although that’s just the first step – coinmama requires you to verify your identity in order to perform trades.
- Coinmama Account Verification
Coinmama’s basic KYC/AML requirement is a government-issued ID, along with a picture of yourself holding a piece of paper saying “coinmama” along with verifiable personal data, like for example your own address and ZIP code. With this, you’ll be allowed to start trading.
If you plan on handling large trades regularly, you’ll need to extend your verification to levels 2 or 3, which require extra documents – such as other types of ID or utility bills issued in your name.
- How to buy bitcoin from Coinmama
Buying Bitcoin from coinmama is simple, as all you need is to select the token you wish to purchase (in this case BTC, but it also supports trading ETH and some altcoins,) fill in the form with the amount you want, and then give Coinmama your payment info. If paying via bank transfer, your transaction can be delayed till your deposit reflects.
Binance is one of the largest exchanges in the world and also one of the main contributors to today’s cryptocurrency scene. Most popular tokens can be traded on Binance, along with many types of tether token and even pegged tokens. These token types allow you to buy and trade crypto such as BTC or ETH using Binance’s own blockchain, with much lower transaction rates.
Binance serves most of the world, South Africa included, creating a bustling global market where cryptocurrencies are traded 24/7.
- Binance Account Opening Requirements
Binance only requires an email and password for account opening. Moreover, as long as you only trade crypto-for-crypto (that is, no fiat,) you don’t need to verify your account with Binance.
- Binance Account Verification
In order to purchase Bitcoin from Binance using credit cards or bank deposits, you must verify your account. The requirement is standard, as Binance only asks for a government-issued ID and a picture of yourself holding a sign with “Binance.” Inscribed.
- How to buy from Binance
Buying from Binance varies depending on whether you’re trading crypto for crypto or purchasing using fiat currencies. Assuming you’re planning on buying using fiat, you’ll need a credit card.
The process is simple, as you just have to select the crypto token you want (Only a few can be bought with credit card – Bitcoin, Ethereum, and XRP among them,) the amount you want, and agree to the price. Then you provide Binance with your credit card data and your account will receive the cryptocurrency instantly.
Another of the largest exchanges in the world, Coinbase is a leader in crypto trading, offering several dozens of the largest tokens in the market. It’s often seen as the main competitor to Binance, with many traders having it as their personal favorite. Naturally, this means that the exchange has excellent security and customer support.
- Coinbase Account Opening Requirements
You can open a Coinbase account with just an email and password. As common with many exchanges, however, you have to verify your account for most transactions.
- Coinbase Account Verification
Basic account verification with Coinbase requires that you provide your phone number, personal information, and a government-issued ID. This will allow you to invest up to $9,500 to use the platform.
For larger amounts, or to trade cryptocurrencies purchased in Coinbase outside the exchange, you’ll have to submit proof of residence and submit a photo ID.
- How to buy bitcoin from Coinbase
Until recently, Coinbase didn’t accept fiat payment methods for most of the world. Recently, however, South Africa was added to the list of countries where fiat payments are accepted, specifically via bank transfers and debit cards.
If planning to purchase via bank transfer, you must verify your bank account with Coinbase, following the instructions they’ll give you – specifically, you’ll need to get a code they’ll send to your bank account via two small transactions. Once that’s done, you’ll be able to withdraw money directly to Coinbase from your bank.
For debit/credit cards, you just need to add your data on checkout and the transaction will be immediately processed.
As usual with fiat-friendly exchanges, all you need to do is select the token you want to buy using fiat, fill the amount you want, and agree to the price. Then, if your account has the funds, you’ll be credited your crypto to your Coinbase wallet. Else, you’ll be asked for your debit card info or required to first fund your account via bank transfer.
Though a much smaller exchange than the ones above, Luno has grown its own niche within the market thanks to its available features and accessibility. It’s also one of the main exchanges available in South Africa, offering customer support at a faster pace.
- Luno Account Opening Requirements
As with other exchanges, Luno only requires an email and password.
- Luno Account Verification
Luno’s requirements follow the norm, with different requirements depending on your level, and different limits based on it. Like other exchanges, you’ll have to provide phone number and personal details for basic verification, and government-issued IDs and proof of residence for further verification.
- How to buy bitcoin from Luno
The process to purchase crypto from Luno using fiat currencies mimics previous exchanges. If buying via credit or debit card, just select the token you want, amount, and confirm – then introduce your payment data. For bank transfers, you must follow the steps outlined in Wallets>Deposit, then once you’ve funded your account, you are free to go ahead and make the purchase.
Bitcoin Brokers, and How to Buy From Them
eToro is one of the most famous stockbrokers in the world, partly thanks to their aggressive advertising – google anything about the stock market and you sure will have ads for eToro the following day. It’s also one of the most by-the-book crypto exchanges, with rules to make sure that everything is legal and transparent.
- eToro Account Opening Requirements
eToro requests very little data to open an account (full name, email, password.) However, just opening the account is the first step, as eToro has a more extensive than usual verification process that’s also mandatory for most transactions.
- eToro Account Verification
Depending on the branch you go for (eToro is the investment branch, eToroX the crypto exchange,) you’ll face different requirements. eToro’s requirements are quite standard, consisting of personal info, government-issued ID, and address verification. eToroX’s, however, has a much more extensive account verification process that requires you to, among other things, fill up a questionnaire about your finances.
- How to buy from eToro
The process to buy will differ depending on the branch you go for.
To buy from eToro, the process is simple – you can deposit using credit cards, PayPal, bank accounts, and a handful other methods, giving you effectively the largest array of possible payment methods to purchase Bitcoin. It also requires a minimum investment of $25. If you do have the funds, buying crypto once your account is funded consists, as usual, of simply looking for the token you want, agreeing to a price for the amount you want, and submitting the order. Crypto purchased from eToro can’t be withdrawn as crypto, however, with very few exceptions.
eToroX, on the other hand, goes the opposite way: You can’t directly fund your eToroX account with fiat currency, not without using a system called Simplex as a workaround. For most intents and purposes, you’ll need to already own crypto to use eToroX. Funding your account then is simple, as you just have to go through the funding steps – create a funding order with the amount you want to deposit, send the amount of crypto to the specified crypto wallet, wait for confirmation. Then, you can exchange your tokens for any other tokens you want. You can only withdraw cryptocurrencies from eToroX. No fiat withdrawals are offered.
Plus500 offers a relatively basic, streamlined interface allowing you to make trades not only on cryptocurrencies but also forex and other types of assets, all the while being a regulated exchange that makes sure every transaction is legal and transparent.
- Plus500 Account Opening Requirements
You need very little to open an account on Plus500, as an email and password will do. You’ll also need a lot more to verify your account, which is mandatory for any transactions.
- Plus500 Account Verification
Like eToro, Plus500 has a strict, extensive verification process that requires that you provide your KYC details with photo IDs, proof of residence, personal details, and even a credit card statement to verify your funding source as legit. These steps are not optional either, and while some platforms accept electronic copies of your documents, such as a scan or a picture, others require hard copies to be mailed.
- How to buy Bitcoin from Plus500
Plus500 offers a decent array of deposit methods, including credit cards, debit cards, PayPal, Skrill, and bank transfers. For each of these, the system guides you through the process to fund your account. Once you’ve completed the process, depending on your funding source you might have immediate access to your funds – or you might have to wait a day or two for transactions to clear.
Once that’s done, you can purchase Bitcoin from Trade > Cryptocurrencies in the same manner as you do in other exchanges. The system also allows you to set up profit or stop-losses to automate sell-off if needed.
How to Buy Bitcoin on Other Open Marketplaces
Other marketplaces also offer an opportunity for buying bitcoin in South Africa. They include open marketplaces like Localbitcoins.
Localbitcoins is a P2P bitcoin trader, in this case in the vein of Craigslists or eBay, but for crypto exchanges. It eschews many of the security features of other sites to deliver a much more streamlined trading system, one that was originally heavily advertised for requiring no identity verification at all – although that has since changed.
- Localbitcoins Account Opening Requirements:
An email address and password will do.
- Localbitcoins Account Verification:
Even though Localbitcoins no longer allows for completely unverified traders, its requirements are still quite lax: With just your full name, phone number, and country of residence you can start trading – with a transaction limit of 1000 Euro a year.
For higher amounts, you’ll need to go KYC/AML, with the requirements being the same as other places: Photo ID, address verification, proof of residence.
- How to buy bitcoin from Localbitcoins:
Localbitcoins openly wants you to directly contact Bitcoin sellers, so the system is a bit different. Rather than selling to you directly, you’ll be put in contact with someone who’s willing to sell. You can contact them via the messenger on the app to iron out the details of the transaction, such as payment method and amounts.
To help with security, Localbitcoins offers an escrow system where both BTC and fiat can be kept. However, said systems are never flawless, so even with this it is advised that you choose a seller who has been in the market for a long time, who has an overwhelming number of positive ratings, and who has been active recently.
While you can post listings looking to purchase bitcoin on Localbitcoins, the community tends to recommend against it as said listings only tend to attract scammers. Look for a seller instead of offering yourself as a buyer.
How to Store Your Bitcoin
In most cases, you can leave your BTC sitting on the exchange just fine – large exchanges are highly secure and offer insurance in the extremely rare case of a hack. As long as you use 2FA and a secure password, your crypto should be safe there.
If you wish to safeguard it yourself, you’ll need a crypto wallet. There are many brands, with varying features depending on what you might prefer. Most are free. In general, you’ll find two types of wallets, offering hot or cold storage.
Hot storage refers to a wallet that can be readily accessed for transactions, like a crypto wallet you keep on your phone. They’re generally safe, or as safe as you make them, but not impossible to hack – just very difficult.
Cold storage is the preferred way to store crypto long-term, and the term is used to refer to a crypto wallet that’s kept in a device that’s not connected to the internet. For regular users, these wallets often come as USB drives that you can plug into your computer when you’re going to make a transaction, then unplug and store somewhere safe. Cold storage wallets are more expensive, but they’re also the safest way to store your crypto.
A Future Outlook
Bitcoin is famous for being the most expensive cryptocurrency and is often regarded as one of the best performing one.
While there’s no doubt that anyone who bought Bitcoin in 2009 for about ten cents of a dollar and sold it on March 2021 for over sixty thousand dollars made a ROI so ridiculously big it may well have been the best investment in human history, we’re not in 2009 and we don’t have 2009 prices.
Bitcoin prices surge high and performs well if the corresponding investments are properly timed. Even in recent years, its performance is huge – anyone who bought Bitcoin during the 2019 crash at $5,000 and sold a few months ago obtained a 1,000% ROI in just two years. That’s more than you’ll get from most investments, and enough to attract lots of people.
What needs to be clear is that, while Bitcoin fetches high prices all the time, with prices during the last year varying between $9,500/BTC and $63,000/BTC, its price is also extremely volatile. Bitcoin is a high-risk, high-yield investment. A well-timed Bitcoin purchase can reap more earnings within six months than most stock market investments do in six years. A poorly timed one, however, can quickly erase all money you invested.
Still, there’s a huge potential to make money investing in Bitcoin – which is why it is a huge crowd puller.