After the initial success of Bitcoin, the privately-funded and U.S.-based technology company Ripple Labs, Inc. created its own currency exchange. “Ripple” refers to one of three things: a cryptocurrency (XRP), the company that created it, and the Ripple network based on the Ripple Transaction Protocol.
Ripple’s remittance network consists of an overall real-time gross settlement system developed in 2012. Its blockchain ledger employs the cryptocurrency known as XRP, which banks and payment networks currently use to settle transactions. XRP, while not as popular as Bitcoin, still ranks as the second largest cryptocurrency by market capitalization with $14.7 billion now outstanding compared to Bitcoin’s current $68.3 billion.
Just as with other altcoins, you must go through an exchange or broker to trade the XRP cryptocurrency behind the Ripple network. Once you have decided to buy and sell XRP, you then need a uniquecrypto wallet where you can store your XRP.
A cryptocurrency wallet address works much like an email address, except that you use the wallet address to pay for goods and services and to receive payments and gifts. You can access your wallet on your computer, tablet or mobile device and/or through a web-based wallet. Ripple charges an extra fee for you to keep XRP in a wallet, but you run the risk of hacking if you keep your XRP at an exchange, so choose the option that seems best.
Overview: Buying Ripple in South Africa
Buying XRP in South Africa requires you have access to a cryptocurrency exchange that allows South Africans to register and that offers Ripple’s XRP. Currently, two cryptocurrency exchanges operate in South Africa: Luno and IceCUBED. However, neither of them offers XRP trading to clients.
South Africans dealing in XRP can still use these exchanges, but they need to first purchase Bitcoin or some other cryptocurrency, send it to another exchange, and then trade it for Ripple. Despite the additional steps, buying Ripple in South Africa can be quite easy, so the broker or exchange you choose matters the most.
South Africans have the option of purchasing Ripple with ZAR directly through international exchanges such as Cex.io and semi-international exchanges such as Coin Direct. Otherwise, if you are using one of the two exchanges used by South Africans, you must register with Binance or some other international exchange that accepts accounts from South Africa to purchase Ripple.
How To Buy Ripple in South Africa
- Open an Account at a Cryptocurrency Exchange
Before opening a cryptocurrency account, you’ll first need a funded account such as a bank account, although some exchanges accept credit and debit cards, PayPal and electronic funds transfer payment.
Before you begin trading, you should be fully aware of the risks and have some knowledge of how to trade cryptocurrency. Once you have secured a source of funding, you can open an account with a cryptocurrency exchange that accepts users from South Africa. IceCUBED (ice3X) and Luno make up the two cryptocurrency exchanges most commonly used by South Africans.
Both exchanges accept deposits from South African bank accounts and once they have approved your account, allow you to trade in several cryptocurrencies. Despite the fact that you cannot purchase Ripple directly through these exchanges, you can trade XRP indirectly through both.
- Get a Cryptocurrency Wallet
In order to trade XRP and retain full control over your transactions, you must withdraw them from the exchange or other source to a personal cryptocurrency wallet. When you open an account with Luno or iceCUBED, a bitcoin wallet for your transactions comes with your account. Basically, a crypto wallet consists of software that allows you to communicate with the cryptocurrency network.
Wallet software allows you to notify the network when you want to send and receive transactions. You can install the software on a desktop, laptop, smartphone or tablet. As an alternative, you can use a web-based version of a wallet that does not require a download.
For increased security, you can store your cryptocurrencies on a hardware wallet, which consists of a peripheral device that connects to a network. All crypto-wallet accounts consist of two elements: your public address, which is much like an email address that you can give out and receive cryptocurrencies; and a private key, which would equate to your password on an email account.
Your private key allows you to make purchases with your cryptocurrencies, and much like your email password, must remain secret. In South Africa, you can download several different types of wallets, whether you decide to open an account with an exchange or not.
These include a desktop wallet, which you should protect with anti-virus software, a mobile wallet, used to make payments in brick and mortar stores by scanning a QR code or by using an NFC tap to pay option and web-based wallets, which do not require a download that you can use from any location with an internet connection.
- Find an XRP to ZAR Exchange Agent
Coindirect provides a list of local XRP agents in South Africa through which you can exchange XRP directly for ZAR to buy or sell XRP using a personal wallet. A list of exchange agents appears below:
- Receive XRP for BTC
As an alternative to Step 3, you can purchase Bitcoin via Luno or iceCUBED and then send it to an exchange that allows you to buy and sell XRP. You can find an extensive list of exchanges where BTC can be converted into XRP at CoinMarketCap by searching for the XRP/BTC currency pair.
You can also use other cryptocurrencies to purchase XRP, such as Litecoin (LTC), Etherium (ETH) or any other cryptocurrency that you can trade from your Luno or iceCUBED account. Once you have purchased Bitcoin or another cryptocurrency on your local exchange, you can then withdraw it from your iceCUBED or Luno wallet to the XRP exchange’s wallet you have selected to receive the BTC.
After completing the above steps, you have to trade BTC for XRP via an exchange. For example, you can use the Binance exchange to sell BTC and buy XRP from its XRP/BTC trading screen. A screenshot of the Binance trading screen can be seen below: Once you have converted your BTC to XRP, you can leave it at the Binance exchange at no cost, or you can withdraw the XRP to a personal wallet in your control. Keep in mind that keeping Ripple in a wallet has a small cost in the form of a reserve requirement.
Requiring this amount protects the XRP shared global ledger from excessive growth that can result from spam or malicious usage. According to Ripple, the current minimum reserve requirement is a modest 20 XRP for a wallet address that owns no other objects in the ledger.
If you intend to just trade XRP without taking possession of the cryptocurrency in a personal wallet, then using an online broker that accepts South African clients would probably be your best alternative. In addition, if you just trade through a broker, you can also leverage your margin deposit up to 300:1 with some brokers.
If you only intend to trade the market without taking possession of the cryptocurrency, you can forgo the wallet and just trade through your brokerage account. While not every broker that offers cryptocurrency transactions will take on South African clients, XTB offers an award-winning full-service forex, ETF and cryptocurrency brokerage and currently does accept clients from the country.
- Pay Taxes on XRP Income
Owning cryptocurrencies themselves does not subject you to taxation, so taxation of cryptocurrencies in South Africa generally arises from income derived from trading or accruing interest on cryptocurrencies. Basically, any South African trading cryptocurrencies could be liable to pay taxes on income derived from their trading activities.
Furthermore, the South African Revenue Services (SARS) states that: “In South Africa, the word “currency” is not defined in the Income Tax Act (the Act). Cryptocurrencies are neither official South African tender nor widely used and accepted in South Africa as a medium of payment or exchange. As such, cryptocurrencies are not regarded by SARS as a currency for income tax purposes or Capital Gains Tax (CGT). Instead, cryptocurrencies are regarded by SARS as assets of an intangible nature.”
Such income remains subject to normal taxation as gross income, since while not considered cash by the SARS, you can value cryptocurrencies to determine an amount gained on transactions to meet the definition of “gross income” in the Tax Act. By following normal SARS rules regarding income tax, the income accrued or received from cryptocurrency transactions gets taxed as revenue under gross income.
Best Crypto Exchanges
Buying Ripple in South Africa may seem slightly more cumbersome than purchasing Bitcoin due to the extra step involved. Nevertheless, once you’ve mastered the procedure outlined above, you should have no trouble getting started. Also, going through the process will educate you and help you better understand how to store and trade cryptocurrencies.
If the extra Bitcoin transaction makes buying Ripple a deal breaker, then the easiest way to start trading Ripple would be to open an account with exchanges like CoinDirect or CEX.io, or with one of the online brokers mentioned above that allow XRP transactions. Remember that going through a brokerage will require you to make a minimum margin deposit.
South Africans may not find Ripple the best cryptocurrency to buy or sell due to the added step of purchasing Bitcoin or another cryptocurrency, but if you go through an international exchange or online broker, you can make your XRP trades directly without having to take that extra step.
Related content: FOREX TRADING IN SOUTH AFRICA
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