[WATCH] 3 Crypto Risks in Africa and How Education Can Help

In Africa which has been identified as one an area of significant opportunity for crypto, with the population having the lowest level of financial inclusion and knowledge globally, this makes Africans the most vulnerable to some of the big risks that have emerged with cryptocurrencies.

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The US Treasury Department wants to educate consumers about the risks of investing in cryptocurrencies by launching an education program.

According to a report, the Treasury’s Financial Literacy Education Commission will create educational materials and organize outreach to inform the public about how crypto assets work and how they differ from other forms of payment.

The upcoming education unit is expected to comprise 20 different agencies, including the Securities and Exchange Commission (SEC).

According to the Unites States government body, the education will be targeting, in particular, people who have little access to financial information – a problem that does not just affect the United States.

In Africa which has been identified as one area of significant opportunity for crypto, with the population having the lowest level of financial inclusion and knowledge globally, this makes Africans the most vulnerable to some of the big risks that have emerged with cryptocurrencies.

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SEE ALSOScams Are on the Rise and Make Up 95% of All Crypto Crimes in Africa, Says Latest Luno Report

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Here are 3 leading risks that African crypto enthusiasts and users are exposed to, with some prominent examples:

Volatility

Volatility is a measure of how much the price of an asset has moved up or down over time.

Generally, the more volatile an asset is, the riskier it’s considered to be as an investment, and the more potential it has to offer either higher returns or higher losses over shorter periods of time than comparatively less volatile assets.

 As a newer asset class, crypto is widely considered to be volatile with the potential for significant upward and downward movements over shorter time periods. 

This poses significant risk to early stage investors, a majority of whom are not aware of the risks.

Most of the crypto players, especially crypto exchanges, have exacerbated the problem by failing to inform their users on the volatility risk, and instead focus on the potential for high gains.

Balanced education is thus needed, especially from the exchanges operating within the African market.

Scams

Cryptocurrency crime had a record-breaking year in 2021, with the latest Chainalysis crypto crime report finding that scammers took $14 billion worth of crypto in 2021.

In one of the more high profile indicidents of crypto theft on the continent, in April 2021, the directors of AfriCrypt, an investment crypto fund, reportedly took in $3.6 billion in investor funds before they claimed that all of it vanished.

Recently, the government of Kenya reported that over $120 million is lost to crypto scams every year in Kenya alone.

BitKE’s recent visit to Zambia similarly revealed massive losses faced by crypto investors in the country in scams that permeate the country.

Uganda’s elite have also similarly lost millions of dollars in crypto scams over the last few years.

The need for awareness on how to identiyf and spot scams remains a huge need. The need to educate new users exists and few players are offering education that helps crypto enthusiasts make informed decisions on how to protect themselves from scams.

BitKE has consistently created content, organized meetups, and tours, both within and beyond Kenya, to help educate more people about the crypto scams, helping them identify and avoid them.

Cyber Threats

As cryptocurrency is a digital asset and all transactions take place online, it offers anonymity to users. These are attractive features for cybercrime groups.

In 2021, Kaspersky detected more than 1,500 fraudulent global resources aimed at potential crypto investors or users who are interested in cryptocurrency mining.

Kenya, South Africa, and Nigeria have been identified as hotspots for crypto malware activity.

Cybercriminals locate sites in popular domain zones: .com, .net, .org, .info, as well as in zones where domain acquisition is cheap: .site, .xyz, .online, .top, .club, .live.

In Africa, there is almost no education when it comes to crypto cyber threats, especially among exchanges, the most popular destinations for crypto users.

The increasing threat of cyber threats have seen many Africans lose funds due to the complicated nature of cryptocurrencies which usually tends to be via an internet-connected device or interface.

The approach towards crypto education that has been taken by the authorities in the United States is therefore an approach that both governments and players in the crypto space in Africa can take of.

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NB: Here at BitKE, education is a key part of our work when it comes to educating cryptocurrency users across the continent, making us the largest and leading blockchain and crypto media and educational platform in Africa.

If you’d like to work with us in helping educate more Africans, and go beyond the current crypto hype, please reach out to us at info@bitcoinke.io.

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RECOMMENDED READING[WATCH] Kenyans Lost $120 million (USD) in the Last Financial Year to Cryptocurrency Scams, Says ICT Cabinet Minister

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