At a time when the people are left to cater for themselves, a lot of young Africans are turning to cryptocurrencies as a primary source of income. This is largely due to the high yield potential of investments in cryptocurrencies, and how quickly this can also happen. However, the good looking opportunities do not allow many of these participants to understand the risks involved and the tendency of falling into the wrong hands.
The State of the Cryptocurrency Marketplace
Cryptocurrency trading and unclear investment schemes are leading the way in terms of avenues through which young people are participating in the cryptocurrency industry. For trading, which is a very risky exercise, many of them depend on trade calls from acclaimed experts who tell them what to buy or sell, and when to do so. This is a practice that has become popular since the early days of online forex trading, about two decades ago.
Without denying that there are polished experts offering these support services, the industry is yet populated with practitioners whose aim is to fleece the ignorant of their funds. This group of “acclaimed experts” may not even be involved in trading, instead, they live off the fees that subscribers pay for their services and flaunt their wealth with the claims that it is acquired from actual trading.
Apart from cryptocurrency trading, the other practice mentioned above revolves around High Yield Investment Programs (HYIPs). Apparently, despite many disappointments over the years, people still patronize such programs, with the hope of generating unproportional wealth over short periods of time. Perhaps, this insistent behaviour could be born out of desperation and the natural hope for miracles in the midst of hopeless situations.
Why Are People Losing Money in Crypto
There have been several advocacies by the blockchain and crypto communities in Africa against the growing trend of insincere practices in the industry. Most often, the groups have encouraged those getting into the cryptocurrency industry to make an effort in acquiring proper crypto education before committing their money.
Apparently, there is no substitute for basic personal education, when it comes to cryptocurrencies. A proper understanding of Bitcoin, cryptocurrencies and how the market works is a fundamental necessity for anyone who wants to participate in the marketplace. Proper education and awareness will save participants a whole lot of time, wealth and emotion, even if they want to operate in the industry using an intermediary.
It is clear that the majority of the cryptocurrency-based investment schemes flying around the space today are classic Ponzi schemes. Many of them claim to use investors’ funds to trade or mine cryptocurrencies. Others use complex explanations of crypto jaggons difficult for newbies to comprehend to fleece them of funds. In the end, they are simply robbing Peter to pay Paul. This is why they always crash after a period of time. The pool of new investors always becomes diminished with time.
For the trade-callers and acclaimed trading experts, the sincerity of the extent of risk involved in cryptocurrency trading is always lacking. These ones will only talk about and post screenshots of their winning trades and not their losses. That is where we believe the deception lies. There is nothing wrong in having losing trades. It is a basic aspect of every trader’s career. The overall trading idea is to have more wins than losses and ensure that when the aggregate is summed up, you are on the winning side.
Crypto Investment Requires Individual Responsibility
As mentioned earlier, there are a few genuine trading experts who are doing a good job at teaching and mentoring newbies in the industry. However, the ones who lure inexperienced participants into virtual trading rooms, hype the exercise and make them pay unjustified fees are part of the bad eggs in the industry. As a newbie, you shouldn’t let yourself fall into the hands of such sweet-tongues. As a matter of fact, whenever it sounds too good to be true, then it is probably too good to be true.
Non-regulation in the cryptocurrency industry is supposed to pass as a good thing. As a matter of fact, it is one of the reasons why a lot of people are independently finding profitable opportunities to make a living by just having access to the internet. However, this same factor, in addition to the pseudo-anonymity of Bitcoin and cryptocurrencies is why bad perpetrators abound. Although the government and regulators are introducing some level of restrictions, while warning the public about the risks involved, there is certainly just so much that they can do.
In the end, the responsibility lies with the individual venturing into the ecosystem. Self-care and personal wealth preservation are ideas that you must have at the back of your mind when venturing into the cryptocurrency marketplace. While we celebrate the enormous opportunity to create wealth in the cryptocurrency marketplace, we must also appreciate the extent of risks associated with the industry. Perhaps, proper education and adequate awareness will go a long way in reducing the number of bad experiences that litter the industry today.
Iyke Aru is a seasoned author and educator in the blockchain and cryptocurrency industry. He has been in the business of crypto content writing for many years with thousands of his articles across several platforms on the internet. Iyke is based in Nigeria where he stands out as one of the most informed and credible figures in the cryptocurrency industry. Outside blockchain and crypto, you will most likely catch Iyke playing or discussing football with friends and family.