Bitcoin to Rand Price? Why do people really care about the Bitcoin price? It’s the first mistake. The bitcoin price is one bitcoin. After all one bitcoin is only worth one bitcoin. This can be a very difficult concept to grasp due to its simplicity. Scrambling around to find a bitcoin price on the internet during bull markets is a fundamental error.
What a lot of people seem to do is react to the Market news. They read or hear news about an ETA ruling that some regulators are making or major exchange launching a new coin. Then, based solely on that piece of information they make an investment decision. (Another culprit is media outlets publishing sponsored content from ICO scams, whipping readers into a frenzy to invest in something nobody has heard of… and most likely never will).
There is no such a thing as investing your bitcoin.
There is no such a thing as investing your bitcoin. Bitcoin itself is the investment. Bitcoin has a value in terms of a FIAT currency like the South African Rand, United States Dollar or the British Pound. The bitcoin values/prices in FIAT money can be measured, at any point in time, but there are many factors to consider. For example, a common way to “value” bitcoin is simply doing a Google search to come up with a rand to bitcoin exchange rate. This works quite well for major foreign currencies, but not so much for crypto. I’ll explain the problem.
FIAT currencies such as the Rand or Euro are all managed by their respective governments, furthermore, there are strict international monetary policy, regulations and controls in place. There are agencies which monitor this across the globe. This cooperation allows for the international financial systems to function and interact. As a result, we are able to grow commerce and industry across borders. These currencies are not wealth creation mechanisms themselves. The services and products built around FIAT currencies may become centralized wealth creation mechanisms. Bitcoin, in contrast, is a true wealth creation mechanism akin to gold.
When you do a search on Google for “rand to dollar”, you immediately get a nice little box which pops up and greets you with pretty much a spot-on exchange rate for the chosen currency. Google get these rates from official indices. You would not be a fool to do your holiday planning based on this exchange rate (Ok, the Rand is a bad example, but you get the point). If you called your bank up to provide you with a rate, it will be pretty close to the “Google” rate.
If you now do a search for “bitcoin to rand” you will get the same cute little box and have yourself an exchange rate for bitcoin. But do you? No, you do NOT, and here is the reason why: Bitcoin’s FIAT value is only that which someone will actually pay you for a bitcoin or sell bitcoin to you. NOT a promise, an actual transaction. Only after the transaction is concluded you can confirm the bitcoin price/value for that specific transaction, as this would not automatically apply to any subsequent transactions.
Google simply look at some major cryptocurrency exchanges and use their average trading rates to calculate a bitcoin to dollar exchange rate. They then use the google ZAR/USD mean rate to give you a South African Rand price for bitcoin. In practice, this will hardly ever be the rate you get. Bitcoin, for example, is more expensive in South Africa than in Europe or the US. This is because of factors such as exchange controls, import duties on equipment, and even the fact that we have an ailing electricity infrastructure makes bitcoin mining uneconomical in South Africa.
Let’s go from bitcoin to Rand to the Dollar. To do this we need to take the Rand exchange rate we get from Google for one bitcoin. We then multiply that with ZAR/USD exchange rate.
(₿1 = R90,910 * 0.07 = $6,363)
If we look at Bitstamp we see bitcoin trading for around $6525 (R93,307). So already there is a variation of 3% to 5%. This is before taking fees and commisions into consideration. Staying with this example we can already conclude that the Google bitcoin to rand exchange rate is guestimating at best. We can take this a step further and look at the bitcoin to Rand exchange rate on a local cryptocurrency exchange like iCE3X.
Here we see that bitcoin is trading in the range of R96,000 – R98,000 ($6770 – $6900). This means that if you take 1 bitcoin and now decide to sell it, you can make nearly 10% higher return by selling on a local exchange which uses the Rand as a base currency. Conversely, if you are looking to BUY a bitcoin, you are in for a shock. Your Google search primed you to spend around R90,910 to buy a bitcoin. You look at the exchange and the cheapest bitcoin is selling for around R96,000+. Your purchase is now nearly 10% more expensive by the time you checkout.
A more accurate way to value your bitcoin in Rand would be to look at a local exchange order book in Rand. (by the way, you can do this here) If you now look at the last price, the highest BUY offer and the lowest SELL offer you will get a much more realistic idea of what you bitcoin is worth in Rand. This is not how much you will get in the bank, this is an indication of the trading range.
Right now, bitcoin is not a great store of value. The reason for this is because the actual value of bitcoin has not been established yet via price discovery. It probably will not be for some time yet. Many tools and mechanisms which central banks use to manage a particular currency such as interest rates for example, simply do not exist in the bitcoin space. Alternative solutions or evolution needs to take place first.
No. The idea of a cryptocurrency like bitcoin replacing the Rand does not make any sense. Bitcoin is deflationary. FIAT currencies are inflationary. You cannot throw a mango on the fire and call it a steak. Bitcoin does not aim to do this either. Instead, its purpose is that of a decentralised ledger system. More like a world reserve currency or a medium to move in or out of FIAT currency.
To many, the bitcoin price (its value in terms of FIAT) is the only thing that matters. Whilst this approach can make you rich instantly, its luck rather than skill. Understanding and exploring the underlying value of bitcoin as a wealth creation mechanism is the where the true investment opportunities lie.
Which camp do you consider yourself a part of? Leave us a comment below!
This article is intended to educate and should in no way be seen as investment advice or an enticement to use the ice3x.com platform. Bitcoin is highly volatile with big profit opportunities but you should also remember that you could lose part or all of your investment whenever you take part in any high risk investment. Bitcoin trading is not a regulated industry in South Africa, which in itself carries additional risks. IF YOU ARE NOT AN ASTUTE BITCOIN TRADER, SEEK INDEPENDENT FINANCIAL ADVICE BEFORE MAKING ANY INVESTMENTS.