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Bitcoin and SA law

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With the rise in popularity of cryptocurrencies, and more particularly, Bitcoin, the question which isn’t immediately thought of by investors is: how do cryptocurrencies fit into your estate plan and have you accounted for them? KEZIA TALBOT, Legal Adviser, BDO Wealth Advisers sheds some light.

Whilst the Reserve Bank, in its Position Paper on cryptocurrencies, has determined that cryptocurrencies are not legal tender, this does not mean that the cryptocurrency which you own is not deemed to be an asset in your estate for all other purposes. Cryptocurrencies are, however, subject to the normal principles of income and capital gains tax, depending on the taxpayer’s intentions. Therefore, they will be treated as an asset in your estate for both executor’s fees and estate duty purposes, if your executor is even aware of the cryptocurrency which you own.

It would be tragic if, for instance, your entire estate comprised the ownership of several bitcoins, but your financial planner or attorney was not aware of this when assisting you with your estate planning and the drafting of your Will, and later on, when administering your estate, as this would result in your heirs receiving little to no inheritance, whilst your estate could be worth several hundreds of thousands of Rand.

Bearing in mind the anonymous nature of cryptocurrencies and the manner in which you hold ownership of the cryptocurrency, it would be virtually impossible for your executor to trace your holdings and properly account for them if they have not been brought to his or her attention. Furthermore, by not including your cryptocurrency in your estate plan, it will be likely that the liquidity calculations performed during estate planning will be inaccurate, thereby impacting on the estate administration process.

As the value of cryptocurrency, by its very nature, is volatile and not generally affected by the same events which affect traditional currencies, it will be difficult to calculate precisely what the effect on your estate will be, from a tax point of view. But this value should be assessed each time you meet with your financial planner, to determine the impact at that point.

So, how do you deal with cryptocurrency in your estate?

In order to understand this, it is necessary to go back to basics and understand how cryptocurrency transactions, and in this case, bitcoin transactions, work:

Satoshi Nakamoto, the creator/s of bitcoin, defines bitcoin as “a chain of digital signatures. Each owner transfers to the next by digitally signing a hash of the previous transaction and the public key of the next owner and adding these to the end of the coin. A payee can verify the signatures to verify the chain of ownership.”

Unlike traditional currencies, bitcoins do not exist in a physical form. Most bitcoin owners have bitcoin wallets, which reflect the value of your bitcoins.  In reality, however, the wallet contains the keys to your bitcoins.

As the keys are crucial for transferring ownership or spending your bitcoin, it is the keys which need to be protected and practically dealt with by your executor.

If a key is lost or no longer accessible, then, in essence, you will have lost your bitcoin.

The challenge, therefore, is to make your executor aware of your ownership of bitcoin and to ensure that he or she has access to the keys.

Without delving into the technical aspects of this discussion, a few options would be to: make a backup copy of your wallet and store same on an external hard drive, which your executor will know how to access, or ensure that you have transcribed the access details for the wallet in a separate document, addressed to your executor. Both the backup and/or the document setting out your access details for your wallet will need to be stored in a secure place, only identified to your spouse, executor or other trusted person, as these details are tantamount to your internet banking login details.

Lastly, it may be necessary to review your current Will or have a new Will drafted, in order to ensure that you have nominated an executor who would be comfortable dealing with these types of assets, and to ensure that your wishes regarding these and other assets, are correctly reflected.

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When will we stop calling them phones?

If you don’t remember when phones were only used to talk to people, you may wonder why we still use this term for handsets, writes ARTHUR GOLDSTUCK, on the eve of the 10th birthday of the app.

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Do you remember when handsets were called phones because, well, we used them to phone people?

It took 120 years from the invention of the telephone to the use of phones to send text.

Between Alexander Graham Bell coining the term “telephone” in 1876 and Finland’s two main mobile operators allowing SMS messages between consumers in 1995, only science fiction writers and movie-makers imagined instant communication evolving much beyond voice. Even when BlackBerry shook the business world with email on a phone at the end of the last century, most consumers were adamant they would stick to voice.

It’s hard to imagine today that the smartphone as we know it has been with us for less than 10 years. Apple introduced the iPhone, the world’s first mass-market touchscreen phone, in June 2007, but it is arguable that it was the advent of the app store in July the following year that changed our relationship with phones forever.

That was the moment when the revolution in our hands truly began, when it became possible for a “phone” to carry any service that had previously existed on the World Wide Web.

Today, most activity carried out by most people on their mobile devices would probably follow the order of social media in first place – Facebook, Twitter, Instagram and LinkedIn all jostling for attention – and  instant messaging in close second, thanks to WhatsApp, Messenger, SnapChat and the like. Phone calls – using voice that is – probably don’t even take third place, but play fourth or fifth fiddle to mapping and navigation, driven by Google Maps and Waze, and transport, thanks to Uber, Taxify, and other support services in South Africa like MyCiti,  Admyt and Kaching.

Despite the high cost of data, free public Wi-Fi is also seeing an explosion in use of streaming video – whether Youtube, Netflix, Showmax, or GETblack – and streaming music, particularly with the arrival of Spotify to compete with Simfy Africa.

Who has time for phone calls?

The changing of the phone guard in South Africa was officially signaled last week with the announcement of Vodacom’s annual results. Voice revenue for the 2018 financial year ending 31 March had fallen by 4.6%, to make up 40.6% of Vodacom’s revenue. Total revenue had grown by 8.1%, which meant voice seriously underperformed the group, and had fallen by 4% as a share of revenue, from 2017’s 44.6%.

The reason? Data had not only outperformed the group, increasing revenue by 12.8%, but it had also risen from 39.7% to 42.8% of group revenue,

This means that data has not only outperformed voice for the first time – as had been predicted by World Wide Worx a year ago – but it has also become Vodacom’s biggest contributor to revenue.

That scenario is being played out across all mobile network operators. In the same way, instant messaging began destroying SMS revenues as far back as five years ago – to the extent that SMS barely gets a mention in annual reports.

Data overtaking voice revenues signals the demise of voice as the main service and key selling point of mobile network operators. It also points to mobile phones – let’s call them handsets – shifting their primary focus. Voice quality will remain important, but now more a subset of audio quality rather than of connectivity. Sound quality will become a major differentiator as these devices become primary platforms for movies and music.

Contact management, privacy and security will become critical features as the handset becomes the storage device for one’s entire personal life.

Integration with accessories like smartwatches and activity monitors, earphones and earbuds, virtual home assistants and virtual car assistants, will become central to the functionality of these devices. Why? Because the handsets will control everything else? Hardly.

More likely, these gadgets will become an extension of who we are, what we do and where we are. As a result, they must be context aware, and also context compatible. This means they must hand over appropriate functions to appropriate devices at the appropriate time. 

I need to communicate only using my earpiece? The handset must make it so. I have to use gesture control, and therefore some kind of sensor placed on my glasses, collar or wrist? The handset must instantly surrender its centrality.

There are numerous other scenarios and technology examples, many out of the pages of science fiction, that point to the changing role of the “phone”. The one thing that’s obvious is that it will be silly to call it a phone for much longer.

  • Arthur Goldstuck is founder of World Wide Worx and editor-in-chief of Gadget.co.za. Follow him on Twitter on @art2gee and on YouTube
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MTN 5G test gets 520Mbps

MTN and Huawei have launched Africa’s first 5G field trial with an end-to-end Huawei 5G solution.

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The field trial demonstrated a 5G Fixed-Wireless Access (FWA) use case with Huawei’s 5G 28GHz mmWave Customer Premises Equipment (CPE) in a real-world environment in Hatfield Pretoria, South Africa. Speeds of 520Mbps downlink and 77Mbps uplink were attained throughout respectively.

“These 5G trials provide us with an opportunity to future proof our network and prepare it for the evolution of these new generation networks. We have gleaned invaluable insights about the modifications that we need to do on our core, radio and transmission network from these pilots. It is important to note that the transition to 5G is not just a flick of a switch, but it’s a roadmap that requires technical modifications and network architecture changes to ensure that we meet the standards that this technology requires. We are pleased that we are laying the groundwork that will lead to the full realisation of the boundless opportunities that are inherent in the digital world.” says Babak Fouladi, Group Chief Technology & Information Systems Officer, at MTN Group.

Giovanni Chiarelli, Chief Technology and Information Officer for MTN SA said: “Next generation services such as virtual and augmented reality, ultra-high definition video streaming, and cloud gaming require massive capacity and higher user data rates. The use of millimeter-wave spectrum bands is one of the key 5G enabling technologies to deliver the required capacity and massive data rates required for 5G’s Enhanced Mobile Broadband use cases. MTN and Huawei’s joint field trial of the first 5G mmWave Fixed-Wireless Access solution in Africa will also pave the way for a fixed-wireless access solution that is capable of replacing conventional fixed access technologies, such as fibre.”

“Huawei is continuing to invest heavily in innovative 5G technologies”, said Edward Deng, President of Wireless Network Product Line of Huawei. “5G mmWave technology can achieve unprecedented fiber-like speed for mobile broadband access. This trial has shown the capabilities of 5G technology to deliver exceptional user experience for Enhanced Mobile Broadband applications. With customer-centric innovation in mind, Huawei will continue to partner with MTN to deliver best-in-class advanced wireless solutions.”

“We are excited about the potential the technology will bring as well as the potential advancements we will see in the fields of medicine, entertainment and education. MTN has been investing heavily to further improve our network, with the recent “Best in Test” and MyBroadband best network recognition affirming this. With our focus on providing the South Africans with the best customer experience, speedy allocation of spectrum can help bring more of these technologies to our customers,” says Giovanni.

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