Ponzi Scheme & Cryptocurrency Trading in Nigeria

Cryptocurrency trading

The concept of Ponzi scheme, cryptocurrency trading and Forex have been misunderstood in and Nigerians can’t differentiate them.

Crypto trading, or cryptocurrency trading, is simply the exchange of cryptocurrencies. Like in Forex, you can also buy and sell a cryptocurrency for another like Bitcoin or altcoin for USD and Euro. This is one way of getting involved in the world of cryptocurrencies without having to mine it.

Forex Trading

Foreign exchange (also known as Forex or FX) refers to the global, over-the-counter market (OTC). Traders, investors, institutions and banks, exchange speculate on, buy and sell world currencies.

Trading is conducted over the ‘inter bank market’, an online channel through which currencies are traded 24 hours a day. Forex is one of the largest trading markets, with a global daily turnover estimated to exceed US$5 trillion.

Ponzi Scheme

A Ponzi scheme is a form of fraud that pays profits to earlier investors with funds from more recent investors. The scheme leads victims to believe that profits are coming from product sales or other means. They remain unaware that other investors are the source of funds.

Sergei Mavrodi launched the Ponzi scheme MMM in 2011. It had subsidiaries in up to 110 countries. It became popular in various African countries including Nigeria and some attributed this popularity to poverty and poor government.

Millions of Nigerians participated in the scheme when it became popular in 2016. The MMM fever was so irresistible that it quickly spread across the length and breath of the country. Though the Central Bank of Nigeria cautioned the public on the dangers of participating in the scheme, many disregarded it. They saw it as a attempt to prevent them from attaining financial freedom.

When the scheme crashed, lots of Nigerians lost their hard earned moneies before their very own eyes. Not even the Army, police, lawyer or government could help at this time. The scheme managers were faceless and had no physical office address to recon with. The aftermath of the MMM Nigeria crash, saw most Nigerians run from anything related to Ponzi scheme. The government and law enforcement agencies also went after Ponzi scheme operators.

Cryptocurrency in Nigeria

Cryptocurrency gained popularity in Nigeria at the time MMM crashed. Ponzi scheme operators knew that the government were after them and there was need to remain as faceless as possible. They resorted to embrace the use of bitcoin as means of payment in their schemes. MMM United and Get help Worldwide are just to name a few.

Not withstanding the MMM crash, some Nigerians still participated in the these schemes . These schemes introduced bitcoins as payment means. For persons new to bitcoin, the terms “Bitcoin” and “Ponzi” meant the same thing.

Most Nigerians are today ignorant of cryptocurrency and blockchain technology so they think it’s a type of Ponzi scheme. When you tell someone about cryptocurrency or bitcoin trading the response you get is “sorry i don’t do Ponzi scheme.” Funny enough this response may be coming from a well educated person who should have known better. Even our government are not helping the situation. See Our Recent Publication. Also see External Publication

Conclusion

We need to sensitize our people on this. Cryptocurrency and Forex trading is not ponzi scheme. It is not MMM and it works on the known market principles of buying and selling. This ignorance has greatly hampered the growth these industries in Nigeria.

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