Africa has witnessed a surge in cryptocurrency adoption, with transactions hitting $20 billion a month in 2021, making it the fastest-growing market for cryptocurrency, according to the International Monetary Fund. However, this trend has also led to an increase in crypto scams and fraudsters exploiting vulnerabilities in the ecosystem. As a result, there is a growing need for more awareness and regulation of the risks associated with cryptocurrencies.
A survey by KnowBe4 in Mauritius, Botswana, South Africa, and Kenya found that 81% of respondents knew what cryptocurrency was, with 52% having already invested in it. The primary goal for their investment was long-term profit (69%), followed by quick profit (39%). Interestingly, 18% opted for cryptocurrency because they did not want to be tied to local banks, and 16% wanted to benefit from next-generation trading and transactions.
Only one-quarter of countries in sub-Saharan Africa formally regulate crypto. However, two-thirds have implemented some restrictions and six countries—Cameroon, Ethiopia, Lesotho, Sierra Leone, Tanzania, and the Republic of Congo—have banned crypto.
However, the survey also found that 36% of respondents had fallen prey to a crypto scam, with nearly 60% knowing someone who had been a victim of such a scam. The most common scam was being tricked into investing through a broker or a platform that is not legitimate. Additionally, 42% were scammed into sending currency to a compromised wallet or directly to a scammer, 22% had invested via a bogus app, and 13% had been tricked into sharing their private keys. Most lost under USD 500 to scammers, but 14% had lost over USD 500.
To address these issues, Anna Collard, SVP Content Strategy & Evangelist at KnowBe4 Africa, highlights the importance of tighter regulation of influencers who promote crypto scams and drive widespread adoption in Africa. She also emphasizes the need for more visibility and transparency in the space to enable people to make informed choices about cryptocurrency investments.
Despite the risks, most of those who had been scammed would invest in crypto again, with only 10% saying that they would never do it again. The survey also found that more than 50% of respondents were aware of NFT projects, with nearly 25% planning to invest in NFTs in the future.
For those on the continent keen to invest in cryptocurrencies and NFTs, it is essential to research thoroughly and ensure that every investment is with a reputable platform and broker to avoid falling victim to scams.