Bitcoin as a cryptocurrency came
to be accepted and loved by the Nigerians as it was an easy and fast way of
acquiring
wealth. With the idea being so new to the Nigerians, it attracted
many people and groups that took advantage of the people’s little knowledge of
the new concept to robe them.
Top Global Scams Target Nigerians
With bitcoin quickly gaining
popularity, the rise of scams involving the cryptocurrency was inevitable. This
included the Mavrodi Mondial Mondial Moneybox (MMM) a 30-year-long global Ponzi
scheme, that robbed millions of Nigerians with promises of 30 percent returns
in as little as 30 days. When the government began to crack down on bank
accounts linked to the scheme, MMM’s operators cut the banks out and started
requiring victims to use Bitcoin It was this scheme that made Nigerians
understand how Bitcoin worked. But out of all that chaos, something fascinating
happened: people realized that bitcoin was just as valuable as money and that
bitcoin is the future.
Some of the techniques used in
scamming the Nigerians includes a method known as cloning, this is whereby a
scammer uses the name and photo of a real dealer and creates a trading profile
on a local exchange that’s good enough to pass a cursory background check.
According to Bloomberg, others will make an offer not of Bitcoin, but of
“billion coin” or some other nonexistent cryptocurrency.
Government Steps In to Combat
Ponzi Schemes
Like in any other Ponzi scheme,
the early investors in Nigeria’s bitcoin scams get paid with the money coming
from subsequent investors. Since this kind of maneuver relies on new sign-ups,
the scheme would collapse if no new investors are drawn in. To combat these
scams involving something that’s not properly regulated and having lost
billions of Naira the government, individuals and other groups have taken the
initiative to curb scams and scammers which according to Bloomberg Business
week includes; Formation of educative groups as one of the educative group
leaders stated that “A lot of people have had their fingers burned,” and hence
the importance to educate regulators and the public about digital currency.
Cryptographic Development Initiative of Nigeria is one of this educative group
that was founded by Adeolu Fade.
The development of informal
groups of traders who had to take the old approach of verifying transactions is
the other method used by Nigerians to deal with scammers. This method is
whereby they set up an informal exchange on popular encrypted messaging app
Telegram, trading among themselves. When other friends sought to join the
group, the group leader would review their identification and banking
documents, comparing passports and papers with the faces in front of him.
Sometimes he’d even have to act as a trusted broker, holding a buyer’s money in
escrow until the seller came through with the Bitcoin transfer. Many networks
have been formulated with each having different security measures. Whereby some
even arrange face-to-face meetings in homes, the backs of small shops, and
other private places, where a buyer hands over hard cash and watches the seller
make the Bitcoin transfer on a smartphone.
On individual basis because of
Nigeria’s high fraud rates, online sellers do not process payments from
Nigerian credit cards. This is why bitcoin has become an attractive option for
consumers there. With bitcoin, there aren’t any costly chargebacks, and on the
basis of transaction origin, it can’t be blocked. The majority of Nigerians
keep it as an alternative asset class by using it as a store of value.
Those living in any politically
and economically unstable country could tell you, anything that leads to money
entails its fair share of deceptions and unlawfulness that the government would
rather turn a blind eye to, let alone fix. The cryptocurrency enthusiasts in
Nigeria are doing everything possible to make sure this market is clean and
absent of fraudulence even if it means following the most primitive and
uninspiring method possible.
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