Demand for cryptocurrency Bitcoin has soared in the last week with prices surging just over 20% on South African-linked exchange BitX.<\/p>\n
The price of a Bitcoin on BitX has risen from R7 443 at 14:00 on May 26 to R8 998 at 10:00 on Thursday June 2.<\/p>\n
South African founded but Singapore headquartered BitX offers a Bitcoin wallet service that allows users to buy and sell Bitcoins.<\/p>\n
BitX also operates exchanges for the cryptocurrency in several countries that include South Africa, Malaysia, Singapore, Nigeria and Indonesia.<\/p>\n
Business development lead at BitX, Werner van Rooyen, explained to Fin24 this week that Bitcoin \u2013 like any other product, currency or commodity \u2013 is driven by demand and supply.<\/p>\n
\u201cOn the demand side, there has been a large increase in Bitcoin transactions on the Chinese yuan denominated (CNY) Bitcoin exchanges over the past few days, which has played a role in pushing up the price there,\u201d said van Rooyen<\/p>\n
\u201cWhen the price increases enough on one exchange, it soon starts pushing the price up on other exchanges around the world as people start to arbitrage, including South Africa,\u201d said van Rooyen.<\/p>\n
BitX\u2019s van Rooyen further outlined two other trends affecting Bitcoin prices over the past few weeks.<\/p>\n
The first centres on Bitcoin\u2019s blockchain technology \u2013 the cryptocurrency\u2019s public ledger which confirms and shares batches of transactions.<\/p>\n
\u201cSome financial institutions are starting to realise that the application of \u2018blockchain technology\u2019 is quite limited, so they are starting to look into Bitcoin again,\u201d van Rooyen told Fin24.<\/p>\n
Van Rooyen also pointed to \u201cmore demand from investment institutions and private wealth managers wanting to buy and hold Bitcoin as part of their portfolio or for their clients.\u201d<\/p>\n
\u201cGenerally speaking, cryptocurrencies and blockchain technologies are becoming more mainstream and better understood. Not just by banks and governments but increasingly by investors, businesses and consumers,\u201d said van Rooyen.<\/p>\n
Another key supply factor affecting Bitcoin\u2019s price is what is called the \u2018halving\u2019 event, said van Rooyen.<\/p>\n
Computers on the cryptocurrency\u2019s network that process transactions are \u2018rewarded\u2019 for doing so in a process dubbed Bitcoin mining.<\/p>\n
At present, 25 Bitcoins get released for every group of processed transactions known as blocks but this process is set to be halved in July.<\/p>\n
This is a process that has been built into Bitcoin to control the likes of inflation and devaluation effects on the currency.<\/p>\n
Bitcoin is only designed to have a maximum of 21 million units, meaning that it is similar to limited supply commodities like gold.<\/p>\n
The next halving event then is set to be Bitcoin\u2019s second such event since 2012.<\/p>\n
\u201cThis will limit the supply of Bitcoin being released into the network,\u201d van Rooyen told Fin24.<\/p>\n
\u201cMost people who buy Bitcoin today, believe that the price will be more tomorrow. This is often based not just on the many current advantages that Bitcoin holds, but its future potential as a global payment system or store of value too,\u201d van Rooyen added.<\/p>\n
Meanwhile, van Rooyen could not disclose the exact user numbers for BitX but he said that the platform is performing \u201creally well across all metrics\u201d since its launch in 2013.<\/p>\n
In July last year, Cape Town headquartered internet and media giant Naspers initiated a $4m funding round for BitX.<\/p>\n
\u201cWe\u2019re active in South Africa, Nigeria, Malaysia, Indonesia and Singapore, with more countries launching soon,\u201d said van Rooyen.<\/p>\n
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