Cryptocurrencies gained global traction during the pandemic, increasing exponentially and gaining an impressive foothold in Africa, says a policy brief released by the United Nations Conference on Trade and Development (UNCTAD). It also unearthed some impressive statistics – currently, there are more than 19,000 cryptocurrencies available, there were only 1,500 in 2018 and 450 crypto exchanges that achieved a combined value of $500 billion in daily trades in May 2021.
The African countries currently leading the cryptocurrency charge are Kenya, South Africa and Nigeria with one of the largest hubs on the continent sitting in South Africa. As recently as June 2022, the Central African Republic adopted bitcoin as legal tender, and a Chainalysis report revealed a 1,200% increase in cryptocurrency payments from 2020 to 2021 in Africa.
There are many reasons why cryptocurrency has gained traction on the continent, most of them related to soaring interest rates, ravaged local currencies and the high walls that the unbanked usually have to climb to gain access to financial systems and support. Cryptocurrencies claim to breach those walls and that makes them sound very attractive. However, they do introduce no small amount of risk. As with anything to do with digital and money, there are those that will find innovative ways to scam the system, con the users and steal the funds.
“People need to become familiar with the threats of social engineering as well as common scams so they can protect themselves, their digital assets, their wallets and ultimately their money,” says Anna Collard, SVP Content Strategy and Evangelist at KnowBe4 Africa. “The cryptocurrency ecosystem is still very much the proverbial Wild West with criminals making immense profits off of people who are not sure of the rules. It’s essential that anyone playing in the crypto ecosystem understands the risks involved.”
That said, there remains immense potential within the digital bank vaults of cryptocurrencies.
One is the ability to engage with the emerging concept of the metaverse – the blended world of human and digital that presents an immense opportunity for businesses and individuals alike. While it is still a fledgling concept that’s mostly hype and conjecture at the moment, it’s important that Africa is not left behind in the discussion.
“A July 2022 KnowBe4 and ITWeb survey unpacked what South African organisations think about the metaverse, NFTs, blockchain and Web3,” says Collard. “Just over half (56%) said they had plans to participate in the metaverse while the majority (82%) said their business doesn’t use blockchain technology, and around 83% said they had plans to do so in the future. There is clearly a positive sentiment towards the metaverse and its potential, but organisations are wary of the risks.”
The survey found that around 28% of respondents had concerns around the security and risk factors that come with cryptocurrency, and at least 30% said they were planning to update their security strategy while 14% said they had already put well-defined security controls in place, specifically to address these emerging technologies.
“Organisations getting involved need to collaborate with their security and risk teams early on to identify what could be at stake and where possible vulnerabilities are,” says Collard. “They need to ensure that developers are adequately trained, apps thoroughly tested and audited, and that end-users are aware of the risks. It’s also important for regulators and policymakers to come up with regulations that can be applied to the metaverse and cryptocurrencies and that can protect vulnerable groups and consumers, without stifling innovation.”
Today, the emergent blockchain-based technologies and conceptual worlds that surround them may still be in their infancy, finding their feet and their way, but they are proving to be more than just passing fads that will fade with time. Moving forward, both consumers and companies playing in this space need to prioritise security and risk awareness to ensure that their investments remain secure, and their experiences positive.
“End-users need to be aware that participating in any new technology makes them a bigger target, so plan ahead, be aware, and recognise the risks,” concludes Collard.