Is this South Africa’s Bitcoin?

Madibacoin, a new alternative cryptocurrency has launched in South Africa.

The alt-coin, which was created by two South Africans, currently has extremely limited real-world functionality, with only airtime being available to purchase using the currency.

Cryptocurrencies are a decentralised digital medium of exchange and are defined primarily as specifications for the use and distribution of the currency they create.

These digital “coins” are created mainly from “mining” – using algorithms and PC processing power to solve cyptographic problems – and stored in a digital wallet associated with that coin.

Madibacoin follows the same basic structure as Bitcoin, the world’s most prolific digital currency. This means that the more coins are mined using the platform, the slower mining becomes, with the creators on record pegging the maximum coins that will ever be created at 20 million.

“Not all Madibacoin users partake in mining, as the network is designed such that mining difficulty increases over time,” the official site says.

The site offers mining beginners a USB application-specific integrated circuit (ASIC) for R199.00, which designed to mine Madibacoins.

“If you get involved in mining earlier, your madibacoin’s may be quite valuable later on.”

However, unlike Bitcoin, Madibacoins (MDC) are not currently exchangeable with other alt-coins or fiat currencies – and certainly lack any significant real-world use, with the only use for the currency being the mine4airtime exchange.

Using a pin-less airtime delivery system, users will be able to exchange MDC for airtime, with top-ups from R2.00 to R999.00. However, the site promises “more to follow soon.”

Madibacoin was started by Neil Croft and Richard Walton, who both hold PhDs from the University of Pretoria. Croft and Walton run mobi-services channel, mahalaMobile.

“We do not own madibacoin, as this would go against the very concept of a distributed network and crypto-currencies – we simply run the network that provides the P2P Network that makes madibacoin possible,” the founders said.

“Madibacoin is about the community, not individuals.”

Bitcoin machine
Bitcoin mining

Cryptocurrencies in South Africa

Madibacoin is not the first cryptocurrency to make waves in South Africa.

By their very nature, cryptocurrencies are decentralised, and can be mined and exchanged anywhere in the world.

Bitcoin is no stranger on South African shores, with growing functionality and use in the country – with local exchanges such as BitX facilitating trades in South African Rands.

Banks and the South African Reserve Bank have also taken note of the cryptocurrency movement.

Standard Bank previously ran a Bitcoin trial – which was ultimately abandoned – while SARB previously told BusinessTech that it is actively monitoring developments in virtual currencies “to inform any future regulatory approaches that may become necessary within the South African jurisdiction.”

South African technology entrepreneur Simon de la Rouviere has also engaged in his own alt-coin experiments, with a digital currency and online music combination in Cypherfunks.

The Cypherfunks currency contrasts Bitcoin by not having a cap on the amount of coins which will ultimately be in distribution.

The currency is currently used as a tipping system as part of the Cypherfunks music experiment.

Speaking at a Nedgroup Investments Cash Solutions Treasurers Conference, de la Rouviere noted that cryptocurrencies “hold immense promise to change the world in unprecedented ways”.

“Any business in the field of recording information fit into a ledger that charges fees to be a middleman is at risk of becoming obsolete,” he said.

More on Bitcoin

Why Bitcoin may re-write banking practice

Bitcoin: the internet’s financial revolution

What SARB thinks about Bitcoin

Standard Bank launches Bitcoin pilot

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Is this South Africa’s Bitcoin?