Why Bitcoin is the Biggest Scam in Sub-Saharan Africa

Do not believe Bitcoin Scams, Learn the Currency Instead

Every moment in Africa, a new pyramid scheme is born, targeting the same people scammed by the last one. Every day, there are new believers. “This one is different.” They say. I wonder who has the last laugh.

Photo by Aleksi Räisä on Unsplash

A lot has been said about the forex market, cryptocurrencies, bitcoin and trading in general. Online media has stories of people who have become millionaires overnight through forex trading, simply FX. Most of them are genuine advertisers seeking to benefit from your savings and mediocrity.

Are these myths? Can one really become a millionaire through FX or Bitcoin, and how much should one invest? What are the real truths about FX?

Traders face a barrage of information when they start out in the markets;

  • Should you risk 1% of your account per trade, or 5%, or 100%?
  • Can one grow a small account to a big one? What are the chances? How small is small and how big is big
  • If it’s about wins and losses, how big can a win get? What about losses? What does one do with the losses?
  • Is Bitcoin really a reliable investment option? Long-term or Short term? What’s the trust-meter for Bitcoin? Can you soundly sleep with KES 1,000,000 (1 million) stored as Bitcoin in a digital wallet?

Granted, some topics will always be debatable.

I will uncover the truth about FX trading. The lies and untruths? We will not bet our certainty on truth, but we will try. First, I will start with Bitcoin.

Some brief facts

1. Bitcoin is a currency not a gateway to millions.

Wikipedia.org defines Bitcoin as “a cryptocurrency (digital currency), a digital asset designed to work as a medium of exchange that uses cryptography (a method of protecting information and communications through the use of codes, so that only those for whom the information is intended can read and process it, to control its creation and management). The same way your M-PESA gives you a personal PIN and tells you not to share it with anyone.

Bitcoin does not rely on central authorities. For instance, M-PESA relies on central authorities like Safaricom and some bank to secure your transactions. Your money relies on the bank to be money. Remember what happened to Chase bank and other banks. The bank gets broke and your money is gone! Over the course of Bitcoin’s history, it has undergone rapid growth to become a significant currency both online and offline — from the mid 2010s, some businesses began accepting bitcoin in addition to traditional currencies. You can hold Bitcoin just as you would the Kenya Shilling in the bank or under your mattress pillow, hoping you still don’t do that.

You can read the original paper authored by Satoshi Nakamoto titled Bitcoin: A Peer-to-Peer Electronic Cash System [here.]

Many people have used Bitcoin, and the misinformation about Bitcoin, to trick ignorant people and scam them of their hard-earned shillings. You need to note;

No one is capable of multiplying your money on a daily basis through Bitcoin. Pyramid schemes and MLM schemes have been in existence even before Bitcoin. Pyramid schemes have existed for at least a century in different guises. Some multi-level marketing plans have been classified as pyramid schemes. Pyramid schemes can use any currency, so long as it represents money.

The unsustainable exponential progression of a classic pyramid scheme, assuming that every member is required to recruit 6 new people, Wikipedia

The idea is to take advantage of your greed. Human beings are greedy, history has proved. One should multiply their own money if they have such powers. Don’t be tricked by pyramid scheme perpetrators.

Have you ever asked yourself why someone would, for instance want to triple your money and not their own?

Many Africans will be lured by scams like crowd1, a get-rich-quick scheme. I guess our financial dispositions are a big contributor to this. You will not get rich through a get-rich scheme. Your greed will mess you up. You will want more, before you realize, you put in more and the provider goes under. Pyramid schemes seem to have a ‘the deal is too good model’, but as soon as the recruitment of new members ceases, members at the bottom of the structure will not receive the promised bonuses or owner rights. That’s a basic fact. Some early joiners benefit early, but only the wise ones who join, get benefits and leave early.

Just to be clear, Crowd1 does not sell tangible products or render any service of essential value, but the primary source of income for Crowd1 is the sale of membership packages to new members.

So, simply put, Bitcoin is like the Kenya shilling, a currency, though digital in nature. It has value, and it’s recognized. Bitcoin is money.

I bought my first bitcoin in December 2012 at a measly $37. I am an early adopter of technology. Back then, it made sense to me and I bought it. I actually read the innovators publication, and as a computer scientist, it made sense. Back then, 1 bitcoin was worth KS 3,700, which was enough to exhaust my savings account. And so I bought myself 1 good bitcoin, spending a huge amount of my salary and savings. My greed would later sell it at $1,000. That’s a huge profit, but that’s for you to judge.

Cryptocurrency has good intentions, to those who know what they're doing. If you are a beginner in the crypto world, you are probably looking for related forums, blogs, documentaries, books, podcasts and YouTube channels. This is a global industry.

The foreign exchange market (Forex, FX, or currency market) is a global decentralized or over-the-counter (OTC) market for the trading of currencies. This market determines foreign exchange rates for every currency. It includes all aspects of buying, selling and exchanging currencies at current or determined prices.

Bitcoin has been accepted as a currency, and can be traded here. In terms of trading volume, it is by far the largest market in the world, followed by the Credit market.

The modern foreign exchange market began forming during the 1970s. In short, people have been trading since the 1970s. With new innovations brought about by the internet, the market has expanded, reaching everyone and for little affordable deposits.

The concept of leverage has greatly enabled this. If forex is that profitable, and there are so many forex traders, why don’t we have enough millionaires. Just a question for thought.

It takes a certain type of savvy trader to navigate unpredictable market conditions and emerge in profit.

The Kenyan market is awash with many products targeting the naive crypto trader. The ignorant person who has heard about bitcoin and how people are benefiting from it. So he’s lured into the trade with promises of getting rich. It’s not as simple as you think.

Many people do not understand what cryptocurrency is. It would be unsuspecting to target these newbies with crypto products with the promises of high returns. An African loves high returns. Little investments with high returns.

The investor smiles to the bank, pools your pennies into one large investment, tricks you into buying more, re-investing, peer to peer referral drives. You invite your rich aunt, your friend, that guy who smiled at you. You grow your network. You put in more money.

Unknown to you, every time during the network growth, the sharp investor is analysis his exit moves. Then on a sunny morning, you wake up and the website is down. You panic. Your ignorance betrays you.

In real trading, both crypto and forex represent a digital store of value and can be purchased and sold with ease. They both have high volatility which creates an opportunity for quick profits going long or short.

These are global markets dominated by large financial players who have algorithmic trading capabilities.

Most individual players cannot compete or match the trading and speed of hedge funds and large banks which swim in these markets.

With the advancement of tech, there are many options to crypto trading, especially the new mode of using bots.

Trading bots are programs that connect to a user’s cryptocurrency exchange and make trades on their behalf. He’s sort of a wise guy who analyses the market and makes buy/sell decisions for you based on a set criteria. They help you make money without engaging much of your time. Since they’re bots, they can’t get tired like you and can scan the market and analyze information better than a human being.

Like in Forex, you can buy and sell a cryptocurrency for another, like Bitcoin or altcoin for USD and Euro. This is one way of getting involved in the world of cryptocurrencies without having to mine it, or participate in some fancy get-rich-quick scam.

You can buy actual bitcoins and hold until price goes up or down, then sell for a taste of the profits. Trading enables you to leverage this.

The main logical question is, why would any company create a product that helps you make money?

The main target for every company is profits, so when they provide that marketing gimmick that they’ll make you rich, what time will they get rich? They tie you down to the believe that they’re working for your interests, when you very well know the latter is true.

The good book says this about riches;

Proverbs 23:4–5 Do not wear yourself out to get rich; do not trust your own cleverness.Cast but a glance at riches, and they are gone, for they will surely sprout wings and fly off to the sky like an eagle.

Making money online

Your thoughts below.

Digital Storyteller | Creative Artist. I write about the broad intersection of Mental Health and Technology. Tweet me @fmwongella