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.
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.
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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Last modified: May 20, 2020 9:09 PM UTC