Ethereum is very popular in South Africa although it is dropping recently

Ethereum was created back in 2014 by VitalikButerin, and the price of an Ether coin has surged significantly since then. It has constantly been compared to Bitcoin which has actually helped the coin become more and more common.

In South Africa, Ethereum has overtaken Bitcoin in terms of popularity. Both investors and entrepreneurs have been enticed by the advantages Ethereum technology has over Bitcoin although some still find it difficult to buy these coins.

Ethereum, as a form of digital currency, is used as a store of value or as a transactional medium. Ethereum has captured the imagination of the South African population with a huge rise in the number of people lining up to purchase Ethereum as a form of investment.

Ethereum Technology

Ethereum runs on the Ethereum blockchain which is computer software technology that, according to its developers, cannot be hacked, tampered with or altered in any way. This technology is a decentralized platform for many other applications besides currency alone.

Its application extends to real estate, finance, banking, crowdfunding and many more. It is designed to run exactly as planned without the possibility of fraud or third-party intrusion and has been used as a framework for numerous other altcoins. We have seen that Ethereum has enormous potential but how does it compare to Bitcoin?

Ethereum now becoming more preferred to Bitcoin

Bitcoin being the most valuable of the cryptocurrencies is considered a better store of value than Ethereum. It is better owning a few Bitcoin than a few Ethereum coins. This is partly due to Bitcoin having an inbuilt scarcity where the production of Bitcoin will reach an end once 21 million coins have been mined.

That means that whatever the number of Bitcoin get lost, they will not be replaced. Ethereum, on the other hand, will continue to have a constant supply. Additionally, one other difference that exists between Bitcoin and Ethereum is that the former blockchain technology is primarily focused on the currency Bitcoin while Ethereum’s technology serves as a foundational cornerstone for other application uses.

However, Ethereum is better than Bitcoin as a means of transfer of wealth. Last year, Ethereum surpassed Bitcoin in the number of daily transactions. More people exchanged and paid for goods and service using Ethereum as their preferred coin.

This is because Ethereum transactions were confirmed quicker than Bitcoin in addition to attracting lower transaction fees. This has been attributed to Ethereum’s blockchain being a newer technology hence more efficient. While the specifics of how the technology works are beyond the scope of this article.

Buying Ethereum in South Africa

Buying Ethereum in South Africa has become much easier. Initially, anyone who wanted to own Ethereum had to buy Bitcoin first then trade it for ether tokens. This was a lengthy process as Bitcoin transaction would sometimes take a long time to be processed.

Companies such as Luno changed the situation when they provided an online platform to buy Ethereum through credit cards or bank transfers in South Africa. The lengthy process of acquiring Bitcoin had been averted.

This method being one of the most popular involves signing up for the Luno wallet, selecting a preferred deposit method to debit money onto the Luno wallet and buying  Ethereum directly; learn more about how to buy it here.

Ethereum Mining

Ethereum miners in South Africa have caused a shortage of graphics processing units that are used in mining Ethereum coins. Manufacturers of these cards such as AMD and Nvidia are struggling to keep up with the demand as there currently is a shortage.

Ethereum mining, unlike Bitcoin, does not necessarily need application specific integrated circuits (ASIC). It was designed in such a way that the problems your hardware is tasked to solve changes every time. It, therefore, becomes impossible to create a circuit that would solve these problems faster and hence obtain the end value.

Ethereum miners have discovered that graphics cards adapt better to these changing workloads and also provide other advantages such as having more memory bandwidth and more RAM.

Drop in Ethereum Popularity

Ethereum popularity in South Africa has however declined recently caused by the following factors;

Profits adversely affected by Ethereum difficulty

Ethereum difficulty simply refers to the amount of workload mining hardware needs to solve to mint coins. This difficulty changes constantly and it is hard for a miner to predict how much of it they would experience in a month.

Some miners apply the increase in average difficulty over time to make their calculations. They need this to work out profits they could make in the future.

The problem comes when constantly increasing Ethereum difficulty results in constantly diminishing returns for the miners. If the price of an Ethereum token sky-rockets, it suddenly becomes more profitable to mine and more people join in.

This again causes an adjustment in the difficulty, and things are soon back to normal. This is very demoralizing to the miners who opt out of mining to avoid losses.

Luno shuts down Ethereum’s instant buy and sell function

One of the major Ethereum wallets Luno disabled Ethereum’s instant buy and sell function in South Africa due to blockchain congestion. This has limited South African’s ability to buy Ethereum directly using Rand.

This extreme congestion on the Ethereum blockchain is due to another website’s launch which led to skyrocketed transactions. Consequently, there was also an increase in transaction fees as well as confirmation times. With the constantly increasing and decreasing transaction fees, some of the key attractions of trading with Ethereum were lost.

Running Costs

There has been an increase in the cost of running mining hardware. This is hugely due to the amount of electricity this hardware consumes. With the increase in Ethereum difficulty over the past months, mining is becoming less and less viable to most South Africans.

Conclusion

Ethereum has been very useful in buying, selling as well as trading. Its popularity has waned recently due to factors such as difficulty encountered in purchasing, profits affected by increasing Ethereum difficulty and high costs of running mining hardware.

Measures taken to correct these setbacks will put Ethereum popularity back on track in South Africa.