Buying Bitcoin for the first time can be challenging for beginners. That’s because there are numerous factors that need to be considered before purchasing the coin. But don’t worry! This guide explains what to consider when acquiring your first BTC, especially if you are in South Africa.
Furthermore, we will also reveal where and how to buy Bitcoin in South Africa. Read on to learn more.
Crypto Regulations in South Africa
Although the South African government doesn’t consider Bitcoin a legal tender, it allows citizens to trade and hold the digital asset. In other words, BTC is recognized as a legal investment. Despite its legal status, Bitcoin hasn’t witnessed massive adoption in South Africa. According to a recent study, only 18% of the country’s adult population holds the coin.
Those who trade BTC on the over 50 licensed crypto platforms are protected by the Financial Advisory and Intermediary Services.
Crypto Taxes in South Africa
Considering the South African Revenue Service classifies Bitcoin as a digital asset, traders and investors who profit from trading or investing in the coin must pay capital gain taxes.
Do Foreigners Pay Crypto Taxes in South Africa?
It depends on the time one has lived in the country. If you have stayed in South Africa for at least a year and make money from Bitcoin, then your gains will be subject to taxes. We recommend seeking the services of a tax adviser to guide you on filing your crypto tax returns.
What to Do Before Buying BTC in South Africa
Before you make your first Bitcoin purchase, there are factors you must consider, including:
1 Picking the Right Bitcoin Wallet
Like any other digital currency, Bitcoin is stored in a crypto wallet. So, you need to find your ideal BTC wallet before buying the asset.
Several types of crypto wallets exist. The most popular are:
Exchange Wallets: These are provided by crypto exchanges. They work like traditional banks, where you give an exchange control over your Bitcoin and trust it to hold the asset on your behalf.
Accessing and using an exchange wallet is straightforward. This is why the wallet is popular among beginners. However, it carries some risks. For instance, if the exchange files for bankruptcy, you may not access your Bitcoin.
Software Wallets: These wallets, which are connected to the internet, let users take complete control of their Bitcoin. That means you do not need to rely on exchanges to hold your digital assets. However, like exchange wallets, software wallets have their shortcomings. For example, since they are connected to the internet, they can easily be targeted by cybercriminals.
Hardware Wallets: These wallets exist to tackle challenges faced by software wallets. They store Bitcoin and other digital currencies in an offline environment, blocking hackers from accessing your funds. However, hardware wallets are considerably expensive.
2. Choosing the Right Exchange
Crypto exchanges operating in South Africa offer varying services and come with different features. Therefore, identifying one that suits your trading/investing needs before purchasing Bitcoin is vital. When comparing exchanges, you can consider aspects like trading fees, ease of use, and minimum deposit requirements. Some of the most reliable exchanges in South Africa include OKX, Luno, Binance, and Valr.
A Step-by-Step Guide to Acquiring Bitcoin in South Africa
We have picked Binance for our guide. Here is how to buy BTC on this leading exchange:
1. Create an Exchange Account
Download the Binance mobile app and register an account using your phone number or email. Remember to verify your identity to remove any limitations on your account.
2. Deposit Some Rand
To purchase Bitcoin on Binance, fund your account with South African Rand (ZAR). You can do so through a bank transfer.
3. Acquire Bitcoin
Once Binance processes your ZAR deposit, click the ‘Trade’ feature and press ‘Convert.’ Next, select ‘ZAR’ and ‘BTC’ and enter the amount of South African Rand to convert into Bitcoin. After approving the conversion, Binance will deposit your BTC into your exchange account. Feel free to transfer it to a software wallet like Electrum to gain total control.
