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Security, knowledge the main challenges to cryptocurrency trade in Africa

Security, knowledge the main challenges to cryptocurrency trade in Africa

Despite US$1.5-million in crypto currency having been traded in Kenya, according to the Blockchain Association of Kenya, the lack of education is impacting progress.

This is according to Kaspersky Africa's Cryptocurrency Report 2019 which, based on feedback from respondents, has highlighted several risks including volatility in value, lack of regulation locally, taxation issues and cyber fraud.

Bethwel Opil, Enterprise Sales Manager at Kaspersky Africa said, "The survey found that there is a desire amongst many consumers to use cryptocurrency, but a knowledge gap is getting in the way of taking the plunge. In addition, many people who thought they knew what they are dealing with, later decided against using cryptocurrency."

The report also provides insight into the South African market and states that nearly a fifth of South African respondents (14%) stopped trading in cryptocurrency because it became too technically complicated.

"This lack of understanding could be leading to mistrust in cryptocurrencies' ability to keep consumers' money safe," Opil said. "For instance, 35% of South African respondents stated that they believe cryptocurrencies are quite volatile and they need to be stable before they are prepared to use them."

The void in education in keeping cryptocurrencies safe has seen fraudsters take advantage of the situation and more people are being scammed. Fraudsters can use cryptocurrencies to their advantage, with around 5% of those surveyed in South Africa saying they have experienced hacking attacks on exchanges.

"Criminals also create fake e-wallets to attract people to unwisely invest their money, and 16% of South African consumers have been victims of cryptocurrency fraud," Opil added.

On a global level, over 80% of respondents have never used cryptocurrencies underlining the low penetration for digital currencies. Only 10% said they understood how these digital currencies work, with 35% viewing it as a fad.

Despite the slowly growing trend on digital currencies, Opil said that paramount to adoption is cyber security.

He said it was commendable for government to set up a task force to understand the space and also help in curbing criminal activities fuelled by the use of digital currencies.

"Always verify a web wallet's address and not following links to an online bank or web wallet," Opil added. "Double-check recipient addresses, the amount being sent, and the size of the associated fee before sending a transaction."

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