← Go back Jun 06, 2023
You can also listen to this podcast on iono.fm . I’m chatting with Christo de Wit, Luno’s country manager for South Africa. Christo, appreciate the time today looking at Bitcoin and the price of Bitcoin. It’s at, call it $26 000, $27 000. It moves around a bunch, but it actually has had a fairly good run. It’s up, what, 180% in three years and up some 90%-odd year to date, sort of quietly under the radar. Simon, thanks for having me. It’s been a very interesting few months for Bitcoin. And, as you rightly said, we’ve seen tremendous growth if we take a broader look over a three-year period. Over the last month or so we have been sitting in the $26 000, $27 000 range with a lot of side sideways action coming from Bitcoin. But this is also speaking more to, I think, global macroeconomic factors influencing this, and taking their toll on this riskier asset. But as it stands a very strong year if we look at the year-to-date performance, and the amazing growth that we’ve seen over the last three years as well. You got another halving coming up for Bitcoin. As I understand it’s only happens in April next year. Historically that’s been bullish for Bitcoin in the run up to that halving. Absolutely. It’s a scarcity problem that is being created with the halving of Bitcoin. Current estimates put it round about April/May 2024 that that would occur. What would happen is the reward for mining Bitcoin is going to halve, so that means less Bitcoin will be produced and created, which then creates that scarcity problem. And that obviously makes investors a little more bullish for Bitcoin. And the key thing with it is this is built into the code. This is the original sort of coding of Bitcoin and will continue to happen. It’s not a new design or something. Absolutely. The total supply of Bitcoin is finite. The set amount of Bitcoin will ever exist. With the current estimations that finite amount won’t be achieved in our lifetimes. That speaks to the scarcity of it and why Bitcoin is I think such an integral store of value. That also signifies, I guess, it’s based in the broader economy as well. We’ve seen Ethereum successfully executing the Shanghai Merge. This was part of the proof-of-work to proof-of-stake, that shift there. This has now happened. State Ethereum can be withdrawn. The process went pretty much as advertised – smooth and largely uneventful. Absolutely. There was a lot of speculation in the run up to this Merge, taking Ethereum from this proof-of-work to the proof-of-stake, ultimately calling it Ethereum 2.0, the Shanghai upgrade, which ultimately had in effect the ability for stakers to unstake their Ethereum from the blockchain went off without any problems. We’ve seen significant growth in the amount of staked Ethereum. Recently we saw that it went up to 20 million Ethereum [that] have been staked. So that also is a signifier that the blockchain in itself has also validated its place in the broader crypto space, and also signals a lot of confidence into the blockchain. And the idea here is the proof-of-work, which is what Bitcoin is. Anyone can go and do the mining, but you need a fairly good rig. You need cheap electricity or high Bitcoin prices, whichever the case may be, [so] that the proof-of-stake kind of removes that process and in some ways democratises it, because it means anyone can go along; you don’t need a big rig and cheap power. Exactly. And that also signifies how everybody can get involved in the blockchain. Staking on Ethereum is maybe a little more complex compared to other proof-of-stake blockchains. But Ethereum definitely kind of sets the way or kind of creates the precedent for that. And, like you said, it democratises it and it also enables everyday people to get involved in the blockchain, playing a vital role in validating the cryptocurrencies that are being created on this blockchain. And it is a way for investors to make a little return on their staked crypto as well. How are the altcoins doing? I mean, we are talking Ethereum in Bitcoin; they are the two big granddaddies in the room in a sense. Certainly Bitcoin, with the giant Ethereum not far behind. Last year was a tough year for some altcoins. Are we still seeing interest there? Are we still seeing activity in the sort of second-tier coins? Absolutely. I think the Altcoins are also performing relatively well. Obviously they trail and match closely the performance of Bitcoin and Ethereum, but then there’s also the utility. I think as time progresses and these altcoins are developed, a lot of them [have] improved upon some of the, I would say, more technical flaws that come from Bitcoin and Ethereum. So the transaction power, the processing power, the transaction fees, are all improved from those other ones. That also creates the value and the demand for those altcoins. We are seeing relatively good performance coming from that. But I just want to caution that people shouldn’t confuse the altcoins with these hyped-up meme coins, which we kind of shy away from. Just be very cautious on the risks associated with those meme coins. Yes. And that’s why I said second-tier. There’s also a bottom drawer, let’s be quite clear. : Exactly. Exactly, around that. And a lot of these altcoins really come with function and purpose, I’m thinking particularly of DeFi and the like where there’s a clear reason for their existence. You kind of get the sense that Bitcoin’s reason for existence is proof-of-concept and it now is a medium of exchange. The others often have much more clarified purposes. Absolutely. These altcoins, specifically also on the Ethereum blockchain. I think we can look at the utility as executing smart contracts, facilitating transactions on these decentralised finance blockchains. I think that’s super-critical to look at. And whenever looking to invest into any kind of cryptocurrency, be very clear around what the utility and the function of that cryptocurrency is, and if that matches the risk appetite that investors would potentially be interested in. Know what you’re buying. A last point. One of the other trends you’ve seen over the last couple of years, locally and globally, has been increased regulation. This is (a) a good thing, and (b) to be expected in a space which is only barely over 10 years old since the first Bitcoins came onto the scene. Absolutely. The way we see it is that regulation is there to protect investors and consumers. And I think this positive move towards regulation is absolutely for that reason. It’s very timeous, because the licence applications for crypto asset service providers in South Africa actually open today. Luno has submitted our application as we speak. So it’s very timeous. It is a move in the right direction, and the ultimate goal of this is to protect consumers. I actually saw some Cat 1, Cat 2 licence applications and, as you say, there’s now crypto on there, right at the bottom. It’s the last asset that’s been added, but it’s now there with Reg 28 and everything in between, in a sense Christo de Wit, Luno’s country manager for South Africa, I appreciate the time.
Read more: moneyweb
