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Bitcoin And Crypto Scam: Why Africansʼ Skepticism Is Justified




Cryptocurrencies, since their launch in 2009, have not had an easy route in the monetary world. The digital currency sent gradually beginning to gain its ground as it is slowly becoming a popular form of payment in most places around the globe.

Recently, there has been a steady growth of interest as most countries are beginning to recognize its prospects. On the other hand, some African countries are still very doubtful when it comes to crypto as they seem to believe this form of currency is, in itself, a scam.

African Skepticism Towards Crypto

Over the years, crypto has been praised as well as criticized. To some, crypto holds to the key to the future but in some parts of Africa, the digital currency has never been short of controversy. And rightly so.

It is no secret that Africa is a hotbed for crypto scams. On many occasions, Africans have been targeted and exploited with the idea of investment opportunities which often promise exceptional results within a short time.

These claims usually prove to be false as the swindlers have always disappeared after having conned so many unsuspecting people of their savings. Some of the worst crypto scams to have hit the African continent include Bitcoin lottery scam, Bitcoin global, and MMM Bitcoin amongst a host of others.

The high rate of bitcoin scams has resulted in Africans losing trust in digital currencies and has ultimately contributed to the slow rate of Bitcoin adoption in some regions of the continent.

Many African countries have expressed negative sentiments concerning the use of crypto and have discouraged its use. In Kenya, for instance, the Central Bank of Kenya has been totally unsupportive of cryptocurrencies and has rejected its use, due to “their unregulated nature”.

Also, other African countries such as Uganda, Botswana, Nigeria, and Tanzania, to mention a few, have expressed skepticism towards the integration of the digital currency. One collective reason for this lack of cooperation is due to its decentralized structure.

Crypto’s Decentralization

Cryptocurrency is a digital currency designed as a medium of exchange. Most cryptocurrencies are decentralized networks that run on a distributed public ledger known as the blockchain. Bitcoin is the first decentralized cryptocurrency.

Unlike any other currency, Bitcoin facilitates a peer-to-peer instant exchange. Bitcoin gives you total possession and control of your wallet without you having to go through a third party (no identifying information is needed to start a Bitcoin account).

Whilst this decentralized structure is the feature that makes cryptocurrencies trustworthy, the exact feature has also constituted the major source of attraction for scammers.

Why Bitcoin Is A Choice For Scammers

Bitcoin scam

Bitcoin, just like most other cryptocurrencies, is a digital currency that operates independently, without any supervision from the government.

While its independent nature has triggered numerous advantages, this same feature makes it prone to all sorts of risks. Sitting comfortably on the top of this list is crypto fraud.

Any bitcoin user can easily rely on digital signatures and the public history of transactions stored on the blockchain, to prove ownership.

Because of its anonymous nature, Bitcoin is increasingly used in scams. There are dozens of different types of crypto scams ranging from giveaway to sextortion, fake exchanges, fake ICOs, bitcoin recovery, Ponzi schemes, video scams, and so on.

July 15th, 2020 recorded one of the greatest crypto scams of all time. Hackers were able to gain access to a good number of prominent Twitter accounts, for bitcoin giveaway fraud. They were able to get away after stealing over $100,000 worth of bitcoin.

Over the past 4 years, 38 million US dollars in bitcoin alone have been confirmed stolen by scammers.

How Can The Skepticism Be Reduced

For the reason discussed above, most African countries are reluctant to embrace or even accept the idea of cryptocurrency and the blockchain network. 

However, this skepticism can be reduced through the creation of decentralized but regulated platforms that are supported either by the government or other recognized bodies. 

On top of that, the government needs to come to the realization that crypto comes with advantages that can contribute to the growth of a country. The government needs to start setting up a regulatory framework that works well for crypto.


Crypto Assets

Crypto prices drop as global market fear increases



Top cryptocurrency prices have fallen amidst a drop in stocks and fears over China’s Evergrande debt crisis. In the last 24hour, Bitcoin dropped from $47,772 to $42,630 shedding about 8.58%. this is the lowest in price since another bull run began on Sept 5 after the April crash.

El- Salvador’s President, Nayib Bukele sees the fall as an opportunity to invest more. Recall that the country adopted Bitcoin as a legal tender on September 7. Despite the adoption, the price of Bitcoin has fallen by almost 14% since then.

Other coins have experienced dramatic crashes within the last 24hours. Solana, a coin that has experienced 355% growth within the last 3 months fell from $162 to $130 shedding about 11.39% within the last 24hours. Solana’s fall may be categorized by the 17-hour outage which the founder, Anatoly Yakovenko said was caused by bots “flooding the networks”

Ethereum fell by 9.37% while Dogecoin and Axie Infinity fell by 11.22% and 14.14% respectively within the last 24hrs hours. While crypto experiences dark Monday, El-Salvador keeps investing more money in Bitcoin.

A look at the global market

The global market is experiencing fear due to the Evergrande debt crisis. A report published by the University of Michigan shows that consumer’s sentiment is beginning to decline. This trend alone may impact the crypto market as well.

On the other hand, the global market downturn must have been spurred by the Evergrande debt crisis. The company grew to be one of China’s biggest companies by borrowing more than $300bn. Last year, Beijing made rules to control the debt owed by big real estate developers. This led Evergrande to offer its properties at major discounts to raise more money to keep the business afloat. Right now, the company is struggling to meet the interest on payment of debts.

Why would it matter if Evergrande fails?

The collapse of the multi-million dollars company would affect the global market; including the crypto market. Many people bought properties from Evergrande and they expect to make gains. If Evergrande falls, crypto investors will be forced to withdraw more money to keep their business running without the means to invest more. When one business fails, the other gets affected indirectly. This also applies to other firms that do businesses with Evergrande.

The potential impact on China’s financial system is another effect of Evergrande’s fall. In his statement to BBC, Mattie Berkink, the Economist Intelligence Unit (EIU), said that “the financial fallout would be far-reaching. Evergrande reportedly owes money to around 171 domestic banks 121 other financial firms” if the company fails, other lenders or businesses may be forced to lend less. Thereby leading to a credit crunch- a situation where companies struggle to borrow money.


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Bitcoin in Africa

The rise of CBDC in African economies



Many nations have taken cues from the world of crypto and its resounding successes over the last decade. In order to avoid getting left behind, governments worldwide are increasingly turning their attention towards implementing some form of digital currency, a CBDC which in full is Central Bank Digital Currency. Although inspired by cryptocurrencies, CBDC’s are quite different from traditional crypto platforms. The main differences are that CBDC’s are unlikely to be decentralized, the supply of this currency regulated by the host’s country’s central bank as the CBDC is designed to operate as a sovereign legal tender, the digitized form of the host country’s fiat currency. Thus, a central bank may issue digitized tokens of its currency of which their value is pegged to the fiat currency of the nation in question, making CBDC’s stablecoins.

Africa has seen a rise in the use of cryptocurrencies and it’s still pushing frontiers in this sector. Although the use of crypto in many African nations is becoming more and more pervasive by the day, the tone of governments in many of these countries toward the sector is cautious at best and threatening at worst. However, a few nations have voiced interests in creating digitized versions of their legal tender to function as a CBDC. Amongst these are Ghana, Nigeria, Morocco, Kenya and Tunisia.

Many of these projects are still in the research phase or developmental phase however. A good example is Ghana’s proposed CBDC, the E-cedi being developed in partnership with German company, Giesecke + Devrient. Nigeria’s CBDC project, the eNaira has been announced and according to Nigeria’s central bank, this CBDC will be launched sometime in 2021. To that end, the CBN has partnered with fintech company, Bitt Inc. to serve as the technical partner in the eNaira’s development. Reportedly, the CBN had made the decision to digitize the Nigerian Naira in 2017.

While the pursuance of digital currencies in African nations is a welcome development, implementation of these schemes isn’t without challenges. Chief among the issues countries in Africa face would be the already existing financial service inequality and poor penetration of internet access in the continent. These challenges must be tackled in order to allow for mainstream adoption of CBDCs and the subsequent provision of financial inclusion. The benefits largely depend on the peculiarities of the nation deploying them. For instance, a digital currency is thought to help Nigeria increase foreign remittances, it’s second largest source of forex after oil. Whatever the outcome of these projects, it is becoming apparent that CBDC’s have come to stay.

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Decentralize Brief

Bitcoin trades above $51k ahead of El Salvador’s adoption



Bitcoin growth

Bitcoin price has rallied above $51,000 ahead of El Salvador’s adoption. The immediate surge in price may be due to the social media campaign that everyone should buy sats of Bitcoin to support El Salvador’s plan to make the coin a legal tender or it may be due to the news of El Salvador’s adoption of the coin as a legal tender on September 7. Users of social media platforms like Twitter and Reddit are discussing how they will buy Bitcoin of $30 each to mark the new El Salvador Bitcoin law.

The surge in Bitcoin’s price began in the last 24hrs with the price rallying around $51,955 with a 3.37% increase. This is an all-time high after the April crash that brought the price of Bitcoin from $64k down to $28k. The move by El Salvador to be the first country that accepts Bitcoin as a legal tender and the social media campaign that leads to a surge in price ahead September 7 are a repetition of events that occurred late last year and early this year with regards to institutional investors and how the price of Bitcoin skyrocketed.

El Salvador, a country in Central America, has been preparing heavily to adopt Bitcoin by installing ATMs to allow citizens to convert the token into US dollars. Last week, the country’s Legislative Assembly passed a law to allow for the creation of a $150m Trust to support the conversion of Bitcoins to US dollars.

To promote the use of Bitcoin, the government states that it will give the adult population of El Salvador $30 in Bitcoin once they download “Chivo” the wallet issued by the government. This was confirmed by the Finance Minister, Alejandro Zelaya.

What this means for Bitcoin investors

Apart from the adoption by Salvadorians, on-chain analytics show that Bitcoin is in high demand. The fourth halving that occurred will make Bitcoin become a scarce token in the nearest future. Thereby increasing the price sporadically.

With El Salvador’s interest in Bitcoin, other countries are likely to follow suit- Panama is considering following El Salvador’s lead. History will repeat itself as this development will serve as another crypto rout that occurred early this year when Tesla and MicroStrategy announced their support for Bitcoin.

El Salvador’s new law allows the use of Bitcoin as a legal tender it can be used to buy goods, pay for taxes and bank loans. This means more demand for Bitcoin, with the fourth halving that occurred, it means less supply. A common rule of economics for demand and supply will apply. Prices are projected to keep rising. At the time of writing this report, Bitcoin is trading at $51,839 with a projection of $52k before the end of today and higher tomorrow when Salvadorians begin to use the token.

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