I have been following reports about an alleged cryptocurrency scam that has been going on and has left many in tears after losing unmentionable sums of money. Listening to pundits on radio interchangebly calling the scam bitcoin and blockchain was the lowest moment for me because it showed a total failure to understand what cryptocurrencies (cryptos) are.
The scam promised depositors a 40% return on their money monthly hence attracting many fly by night, get rich quick addicts. They borrowed money, invested their savings, gathered their relatives to co-invest, sounds familiar? They were being sold tales of how the money is invested in cryptos and multiplies very fast as a result.
A Cyptocurrency is a digital currency that uses cryptography for security (like the water marks you see on paper money) thus making it difficult to counterfeit. Examples incude Bitcoin, Litecoin, Ripple, Stellar among others.
Cryptocurrencies enable normal execution of financial transactions online. One can buy or sell using Bitcoin for as ong as the other party can transact using the same medium. Microsoft, AT&T, Expedia, Norwegian Air and Travala are some of the globally known brands that accept Bitcoin transactions.
Lack of regulation aside, cryprocurrencies are looked at as the future of currency. Being a new concept, the scammers are always awake to exploit the ignorance of the masses. The scams are no different from the Black Dollars con where one is given a box full of dollar size papers and some liquid with the promise that you can print your own dollars at will.
Some indicators of scams are;
- The lure for high returns amidst minimal risk on the investment. Imagine the promise that these Ugandans got of 40% returns monthy. Which business can guarantee this? Maybe selling cocaine or heroin.
- Being pushed to urgently make a decision after a pitch. The agents are designed to make the sale in a manner that doesn’t give you time to have a second thought.
- Information expecially online is usually not easy to come by but in cases where you find it, not much can be deciphered. I saw this with One Coin when it was initially marketed to me.
- If it is too good to be true
- When you do not understand the actual business and how it brings in the money.
Media pundits have blamed the Government for not regulating the Cryptocurrencies. They forget that the growth of technology is much faster than governments can keep pace. Imagine Mobile Money which has been a part of our economy for over a decade still has not got the full regulatory mechanism in place. We only hope to see that happen probably next year. How about cryptos which are not only new age but ever changing in design?
One would think that the gullible victims are the poor unemployed Ugandans looking for a way to make a quick buck but that doesnt explain the presence on the list of some top military officials who put in millions as well as a good number of corporate employees.
So, other than blame cryptocurrencies for what is going on, we should be focusing on the scams and the perpetrators who try to hide under the noble innovation of Cryptos and Blockchain. The funny thing is that the victims are now looking for the next scam to join.
Nothing substitutes eaarning through legitimate hardwork especially if your goal is lasting wealth.
James Wire is a Business & Technology Consultant based in Kampala
Twitter – @wirejames
Email – lunghabo [at] gmail [dot] com