Exploring the emerging trend of using cryptocurrency as a hedge against inflation, highlighting real-world applications and driving economic growth in South Africa.



Cryptocurrencies have had a tumultuous history, often marred by speculation and fraudulent activities. However, the recent decline in public interest has allowed for more realistic applications to emerge, along with appropriate regulation. This maturation of the crypto space has led to an exploration of cryptocurrencies as a potential hedge against inflation.



Ahren Posthumus, CEO of Momint, a tech startup based in Cape Town, believes the reduction in hype has allowed for a focus on real-world projects that are auditable and have a real background. &#8220;We&#8217;re seeing this [crypto as a hedge against inflation] quite a lot&#8230; But not only is it being used as a hedge, it’s also being used as a mechanism to drive the bottom line and solve real problems that South Africa is facing right now,” he says to FORBES AFRICA.



Another notable advantage of cryptocurrency as a hedge against inflation is stablecoins. Since stablecoins are backed by the US dollar, owning them is equivalent to saving in dollars. Storing funds in USDT or earning in other stable tokens like USDC can help keep finances protected from devaluation.



According to Peter Mureu, Marketing Director at Yellow Card, “The rand has dramatically lost its value over the past decade. From ZAR10 for $1 in 2010 to almost ZAR20 for the same amount now, the purchasing ability of the rand has nearly been cut in half. Investing in crypto, especially USDT will allow for that risk to be halved and increase the ability to purchase alternative power sources to deal with the current power issues/load-shedding. For those earning in USDT, even the lack of power is an easily surmountable problem because the USDT is constantly appreciating regardless of the state of the rand.”



One such problem is South Africa’s current energy crisis. The combination of large tax rebates for investments in renewable energy, coupled with platforms such as Momint, has seen large growth in realistic applications for cryptocurrencies. “Our tokenized, fractionalized solar investments qualify for Section 12 rebates… this is massive,” continues Posthumus.



Lerato Lamola, consultant and crypto specialist at Webber Wentzel, notes that South Africa’s legislative process seems to be in line with this, with the country classifying crypto as a financial product rather than a security. This allows crypto to be managed more easily within the framework of existing financial instruments.



“South Africa is really focusing on the man in the street,” says Lamola. “South Africa is now focusing more on how crypto is impacting retail consumers.”



Cryptocurrencies and blockchain technology are emerging as potent tools for socio-economic development in Africa, particularly South Africa. By facilitating low-cost remittances and microloans, they&#8217;re creating meaningful changes that uplift the economy.



Posthumus sees the burgeoning sector as a vehicle for innovation and economic growth, asserting that cryptocurrencies could engender a more equitable financial system by enabling secure and cost-effective transactions.



In Africa, cryptocurrencies and blockchain technology are no longer theoretical concepts; they have become practical tools driving tangible change. Platforms such as Momint are already realizing this – one such example is the ability for users to fractionally invest in renewable energy projects, allowing investors to generate returns, take advantage of renewable investment tax breaks, and invest in sustainable development.



Cryptocurrencies in South Africa and Africa are increasingly seen as more than just volatile investments, but as powerful tools.



&#8220;The biggest thing for us is about having a product that people can use and understand. It’s about education, and we need to be building that trust with the consumer,” adds Posthumus.

Bitcoin on digital circuit board and graph

Crypto As Inflation Hedge: South Africa’s Innovative Approach To Digital Assets

By Uzoma Dozie, Chief Sparkler



Nigerians are some of the world’s most creative, energetic, and entrepreneurial people. We are rich with talent, enthusiasm, and passion.



Nigerians are a global force bursting with potential and an enviable track-record of success. But in a more complex and fast-paced world than ever before, many of us struggle to find the time or have the ability to fulfil their potential.



Ultimately, this comes down to the lack of effective solutions in the market to support the lifestyle and finances of Nigerians and our businesses. For too long, we have been underserved by the traditional physical retail environment, which is limited by bricks and mortar infrastructure and legacy technology – the weaknesses of which have been laid bare by the Covid-19 global pandemic.



Unlocking Nigeria’s digital economy



While Nigerians are being underserved by current circumstances, there is also an exciting opportunity to start filling a gap in the market.



Nigeria’s digital economy is thriving, but it remains informal. Nigeria has a population of 198 million people – 172 million have a mobile phone and 112 million have internet access.



Many of us access social media platforms such as Facebook and Instagram through our phones and use them as valuable sales tools, especially female entrepreneurs. Data and digital applications have the potential to revolutionize the daily lives of millions of Nigerians.



Therefore, new digital-only solutions are required. These should not just focus on finances though – they have to be intrinsically linked with everyday lifestyles, rather than thinking about linear processes and transactional outcomes.



Let us take one example. Chatbots powered by artificial intelligence have long been used to provide financial advice. But these chatbots could do so much more and evolve to provide support for more sophisticated usage, such as a personal adviser or lifestyle concierge.



Furthermore, these solutions should not just support Nigerians at home, but the ever-growing diaspora across the world.



Introducing Sparkle



The opportunity to play an integral role in transforming Nigeria’s digital economy and lead the charge in growing the digital economy across Africa inspired the creation of Sparkle.



Sparkle was founded with five core values – freedom, trust, simplicity, inclusivity, and personalization. We are adopting these values and embedding them in everything we do.



We will be leveraging technology and data to create and apply new digital-only solutions which bring more Nigerians into the formal economy thereby benefitting Government, businesses, and individuals.



Starting with the launch of a current account, we will co-create with our customers and collaborate with our partners to improve our services and increase our user base. We embrace collaboration and we are



working with some of the world’s biggest companies, including Google, Microsoft, Visa, and PwC Nigeria, to achieve our vision.



In addition, we want to create a more inclusive economy and break down barriers by accelerating the role and influence of female entrepreneurs, many of whom already operate in the informal economy with the help of Instagram and other social media apps.



At present, we are facing a global crisis in the shape of the COVID-19 pandemic. COVID-19 has shown us that we need a strong digital infrastructure to ensure the economy continues to function. It will likely completely change the way we operate and conduct business in the future.



COVID-19 has only reinforced our belief that new digital solutions like Sparkle are required now more than ever before to serve Nigerians, boost the formal economy, and unlock potential in the digital age.

Tag: Digital Age

FORBES AFRICA SOCIAL MEDIA

Crypto As Inflation Hedge: South Africa’s Innovative Approach To Digital Assets

Op-Ed: How Nigerians Can Unlock Their Potential In The Digital Age