Luno has made investing in cryptocurrency cheaper in South Africa, thanks to its support for Ethereum.
Before its support for Ethereum, South Africans who wanted to buy Ethereum – or other altcoins – typically had to purchase Bitcoin from Luno, send it to a cryptocurrency exchange like Poloniex, and then buy their desired cryptocurrency.
This process incurred Bitcoin transaction fees and could take several hours.
By adding support for Ethereum, Luno has made it possible to buy Ethereum instantly, and made buying other currencies considerably cheaper.
Bitcoin no longer required
With Ethereum purchases now available in rand, investors can spend less when buying other cryptocurrencies.
Ethereum has a number of advantages over Bitcoin as a transactional currency, including lower transaction fees and confirmation times.
Using Ethereum, you typically spend the equivalent of around R3.00 as a transaction fee and wait a minute or two for the transaction to go through.
This is far quicker and cheaper than Bitcoin, which can take hours to confirm payments and cost around R280 for a transaction.
The average transaction fee on the Bitcoin and Ethereum blockchains on 12 November 2017 were:
- Bitcoin – $19.20
- Ethereum – $0.21
It is important to note that transaction fees are static, meaning that if you sent R5 worth of Bitcoin to someone, you would have to pay the R280 transaction fee.
These fees vary depending on the backlog of Bitcoin transactions and other events.
There are two ways to buy Bitcoin on Luno – instant purchase, or through the exchange.
Ethereum can only be purchased or sold through the instant service currently, but exchange support is coming in the near future, said Luno.
“ETH buy or sell transactions on Luno are instant and guaranteed, they can’t be reversed or returned,” said Luno.
“If you have bought ETH, you can always sell it again – if you sold some, you can always buy it back later.”
While Luno’s Ethereum wallet is a great tool for purchasing Ethereum – either as a trading token or an investment – users may want to store their cryptocurrency in wallets which give them control of their private key.
A cryptocurrency blockchain does not recognise users, only private keys which link to public addresses. If you do not have the private key of your wallet, you technically do not own the cryptocurrency.
Services like MyEtherWallet let users control their private key.
An exchange like Luno hold your funds and private key for you, and keeps track of your cryptocurrency balances.