The region's traders are highly aware of scams and avoid them.
Blockchain forensics firm Chainalysis has found that crypto traders in Africa are less likely to have sent tokens to, or received tokens from, known scam addresses than traders in other regions in the past year.
In the Chainalysis “2020 Geography of Cryptocurrency Report”, the firm states that the percentage of illicit cryptocurrency activity associated with scams isn’t as high in Africa as other regions around the world. Illicit cryptocurrency activity accounted for just 2% of the region’s roughly $16 billion trading volume from July 2019 to June 2020. Scams accounted for 55% of this low level of illicit activity.
“People in many parts of Africa have fallen victim to financial scams common in the fiat world, such as pyramid schemes and other investment scams,” the report stated.
“While scams still make up a large portion of illicit cryptocurrency activity in Africa, the share isn’t as high as it is elsewhere.”
However, in Eastern Europe, where illicit transactions made up six times that of Africa's figures for all crypto volume that year, more people are likely to fall for crypto pyramid schemes and "giveaways". Scams compromised 50% of all crypto in the region's much higher level of illicit transactions, and Eastern Europe is a hotbed of darknet activity. East Asian traders were the most likely to fall for scams, with 86% of all illicit crypto sent going towards scams.
So how have the numbers in Africa stayed so low compared to other regions, when it’s often associated with crypto Ponzi schemes and Nigerian princes?
It’s difficult to say but the report notes the greater awareness of scams in general has made it difficult to convince African users to even try crypto platforms like Paxful, meaning those who are brave enough are probably highly cognizant of the possibility of scams.
Growing crypto education may be another explanation. Binance South Africa country manager Tanya Knowles said in March that the best approach crypto traders in the country can take is to “ensure there is education around scams... we need to get the basics in place before we open it up and say, go wild and start trading.”
One of the leaders now championing blockchain and crypto education in Africa was once a victim of crypto scams herself. Doris Ojuedeire founded the non-profit organization Blockchain African Ladies and the platform Crypto Lioness, both of which are intended to educate women about blockchain technology and crypto trading, respectively.