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Running a Bitcoin Exchange in Nigeria – An Interview With NairaEx CEO David Ajala

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Earlier this week, Bitcoin Africa had the chance to interview NairaEx CEO David Ajala to learn more about the story behind NairaEx, how he came across bitcoin and the rise of bitcoin in Nigeria.

NairaEx is one of the most popular bitcoin exchanges in Nigeria, which puts Ajala in a great position to witness the exponential growth of bitcoin in the West African country.

David Ajala“I came across bitcoin in 2013 while looking for alternative remittance mediums. Sending remittances to friends and family abroad had cost me a significant amount of money and time when relying on banks and Western Union-like services. Looking back, in 2013 bitcoin was significantly smaller with a small user base and significantly lower value, but the speed and cost of transactions were unbelievable, incomparable to any other service I had used previously. Being on a global scale, I also had no restrictions on where to send my money to,” Ajala stated.

What inspired you to launch the bitcoin exchange Nairaex?

Launching the bitcoin exchange primarily came from the restrictions faced by Nigerians looking to send money abroad. Relying on traditional systems such as banks and Western Union, Nigerians often end up paying some of the highest fees in the world.

Coupled with the volatile Naira, sending money abroad using banks simply doesn’t give assurances your money will still have value after fees and Naira exchange rates are calculated. This is where bitcoin came to be a perfect solution as prices are considered stable and fees significantly lower on our exchange.

What’s your opinion on the future of bitcoin and the blockchain in Nigeria and Africa in general?

The future of bitcoin seems bright compared to the past. Currently, markets are considered favourably for traders with daily price swings many can profit from. For companies and private users, bitcoin remains more reliable than the naira with a single exchange rate, parallel markets don’t affect bitcoin prices like they do to the naira.

However, scaling will become a bigger issue as the number of bitcoin users increases to almost 6 million (according to the Cambridge University), transactions are getting slightly slower, taking on average 10 minutes but are still significantly faster than Western Union, which often takes days.

Considering the cost of remittances in Africa in general, bitcoin will prosper well into the future as transactions remain cheaper and faster, although a scaling solution needs to be found.

How fast is Nairaex.com growing? Can you tell us how many users NairaEx has?

In line with the huge interest in bitcoin markets, NairaEx too has grown relatively fast. Having accumulated over 100,000 customers last year, bitcoin use has grown exponentially around the country as many of our customers see the value of crypto compared to the traditional naira.

Furthermore, having successfully completed over 170,000 orders since launch, the exchange has become one of the most trusted names in the country. Currently, NairaEx processes over 1 billion naira worth of transactions every month.

What challenges do you face running NairaEx?

As with any bitcoin exchange, many of the risks we encounter relate to the origins of funds being used on the exchange. While the majority of funds transferred by clients are clean and transactions hassle-free, a minority remain complicated as funds could be stolen, obtained via fraud or are outright illegal in some cases.

The risk does remain large as often it only takes one rogue transaction to cause months of legal and financial complications. Luckily, we are continuously working to improve our fraud prevention mechanisms to ensure all transactions remain legal and safe.

What is next for NairaEx?

The future for NairaEx is likely to involve an expansion in services to accommodate a range of consumers.

Currently, our service is exchange and remittance centered, but as bitcoin use and adoption increases, we hope to provide merchant and corporate services to complement our current offering. As our blockchain service matures, we may also launch Bitcoin investment funds to allow consumers to profit off the extremely volatile crypto markets.

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Fake Bitcoin Smartphone Apps Have Been Downloaded Over 10,000 Times

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Fake Bitcoin Smartphone Apps

Cryptocurrency users need to be aware of some of the dangers they face when using the Internet, and even tech-savvy bitcoin enthusiasts are not immune from harmful actions such as social engineering, phishing, and trojans. A common assumption is that apps downloaded from Google and Apple’s app stores, have been vetted by the service providers and are safe. However, nothing can be further from the truth as thousands of cryptocurrency users have come to realise.

The Case of the Fake ‘Poloniex’ App

While both Android and iOS platforms have had their share of unscrupulous developers, users on Google Play store are the most affected by fraudulent apps. An example of a fake Android app which has been downloaded by thousands of users is called Poloniex. Bearing the same name as the popular digital currency exchange it claims to be the official Poloniex app. No doubt users who only take a perfunctory glance before pressing ‘Download’ will be convinced by the familiar logo and screenshots from the real company.

However, a close examination will reveal the low user ratings of one star received from 162 user reviews. In addition, the numerous typos in the app description together with disgruntled comments from users highlighting theft of personal data and bitcoins should raise a red flag.

Surprisingly, the Poloniex exchange lacks an official mobile app and this explains why scammers have taken advantage of the void with their fake version of the app. Poloniex has done little to distance itself from third-party apps choosing to remain silent on the matter since 2016. Currently, there are five different imitations of Poloniex on Google Play alone, according to Bitcoin.com.

Fraudulent Apps a Real Problem for Internet Users

Scammy apps are not only isolated to the cryptocurrency space, it is estimated over a million people downloaded a fake version of Whatsapp from Google Play store.

Scams are evolving with new tricks being used to lure vulnerable targets; with reports of fake customer care telephone calls from digital currency exchanges Coinbase and Kraken. These hoaxes, have the potential to affect Africans using the open web to obtain and trade cryptocurrencies.

With bitcoin adoption in Africa still in its infancy stages, many users may find it hard to identify fake cryptocurrency apps. Already, the continent has had its share of digital currency scams in the form of bitcoin HYIPS and MLM schemes so it is highly advisable to take caution when downloading cryptocurrency apps to ensure they are real.

To avoid issues of fake bitcoin smartphone apps in their entirety, the safest bet would be to do all your bitcoin trading on your computer and use your phone for price updates and cryptocurrency news.

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Kenya Blockchain Event in Nairobi Records a Huge Turn Out

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Kenya Blockchain Event

December 10, 2017, saw a large number of bitcoin experts, enthusiasts, investors, newcomers, and traders converge at the Metta Entrepreneur’s Club Nairobi. The atmosphere indicated an increased desire among Kenyans to understand and discuss cryptocurrencies at length.

The four-hour discussion was detailed, explicit, and informative. Key speakers included Michael Kimani, Daniel Nyairo, Janet Kemunto, Damaris Njoki, and John Karanja among others. These cryptocurrency experts had a lot to share and plenty of advice to give. Thanks to their endless efforts, the crypto scene in Kenya is presently buoyant.

Is Bitcoin Valuable?

According to Michael Kimani, bitcoin is valuable.

“The bitcoin surge is more than just speculation. A substantial number of people are purchasing bitcoin because they believe in its future. These people are betting on the future because there is proof that the underlying technology (blockchain) actually works,” he said.

Is Bitcoin in a Bubble?

2017 has been a great year for cryptocurrencies.

“I have been in the technology sector for ten years and I have never seen anything grow as fast as cryptocurrencies have this year,” John Karanja, the founder of BitHub Africa, said.

The bitcoin price has risen by more than 1,500 percent in 2017. Surprisingly, altcoins like ether have risen by a higher percentage than bitcoin this year. Still, bitcoin is taking the lead with its current price of over $16,000. The recent surge has left many wondering: is bitcoin in a bubble?

In the opinion of Mutai, a software engineer, “Bitcoin is somewhat in a bubble because the underlying technology is being overlooked. Currently, the bitcoin price is keeping up with the pace of speculation.” Nevertheless, the self-taught tech expert believes that bitcoin is worth it in the long-term.

Where Can Kenyans Buy Bitcoins and Altcoins?

Expert recommended exchanges are Belfrics Kenya, Kraken, Bitstamp, and Bittrex. Other platforms such as peer-to-peer (P2P) markets are also great places for purchasing crypto.

Localbitcoins, Paxful, and Remitano Kenya are suitable P2P markets.

Tips On Cryptocurrency Investments

Advising clients on cryptocurrency investments is a full-time job for George Mang’eni, an experienced trader at the Nairobi Securities Exchange (NSE). “Keep calm & HODL,” he advised attendees at the event.

Bitcoin investments are made through mining, trading, and HODLING (Holding On for Dear Life). Mang’eni recommends investors to conduct a fundamental analysis and create a portfolio before investing in cryptocurrencies. “Always invest in an asset that is higher than the inflation rate,” he said.

A fundamental analysis involves looking into the following:

  • Real-world application of the cryptocurrency
  • Researching the reputation and achievements of its developers
  • The big investors involved
  • Liquidity
  • Crypto supply limits
  • Transaction processing system

Security is a Priority

Any person who owns crypto knows that security is everything. The crypto scene has attracted a lot of scammers, hence the need for caution.

Daniel Nyairo, a cryptocurrency freelancer stated, “Scammers use social proof to steal from unsuspecting customers.” The social proof marketing technique is often used to make customers feel like they are missing out. “A person selling bitcoins to you while trying to influence your emotions should be a red flag,” Nyairo warned.

With regards to ICOs (Initial Coin Offerings), attendees were advised to research thoroughly before investing. “Investigate the authenticity of the names and images of those behind the project,” Nyairo stated. Furthermore, he emphasised the need to carefully scrutinise business models, business descriptions, and business processes of the companies launching ICOs.

The Three Kenyan Women Thriving in Cryptocurrency Trading

Kenya Blockchain Event NairobiAccording to Damaris Njoki, Juliana Mwangi, and Janet Kemunto, bitcoin trading is a rewarding employment opportunity. “We do not work for the money; the money works for us,” Kemunto said.

Juliana and Kemunto both left their jobs to take up bitcoin trading as a full-time job. “Cryptocurrencies are the future. I love what I do,” Juliana asserted.

Trading bitcoin requires two things: trust and 0.2BTC. “My job is not about meeting the margins; it is about the client,” Kemunto said. “My goal is taking care of the client and in turn, the client takes care of me.”

The main challenge that these women face is a low supply of bitcoins. Other than that, the demand for bitcoins is huge. “We have markets not only in Kenya but also in China and the UK,” Damaris said.

Meet Kenya’s Popular Miner Eugene Mutai

Mutai has been making headlines as the only crypto miner in Kenya for a while now. The millennial states that it took him two months to put his mining rig together. “For a non-tech savvy person, it might take longer,” he said.

Mutai mines Zcash and other altcoins. “I began with a modest budget and it took me around 8 months to break even,” he explained. Cloud mining is one and a half times more expensive than mining individually,” he added.

Two-thirds of what Mutai mines are his profits. The rest goes into electricity and Internet costs. Nevertheless, he faces two challenges that result in the loss of two months of mining yearly. “I need to back up my Internet in case my main connection fails me. On the other hand, I experience electricity blackouts on average twice every week,” he said.

Kenyan Regulators are Lagging Behind

Cryptocurrency regulation in Kenya is still a major topic mainly because little is taking place. “Kenyan regulators will find themselves playing catch up,” William Mutiso, a crypto trader said. Kenya has lost the business from startups such as Kipochi and BitPesa because of poor regulations.

“There is need to keep these conversations going to show regulators the extent of crypto interest in Kenya,” Eddie Ndichu, a cryptocurrency enthusiast, noted.

Upcoming Startups and Events

Despite regulation setbacks, the Kenyan crypto space is taking in new startups as fast as new ideas are conceivable. Some of the startups under the works are JijiPlan and Pesabase. Other startups like ChamaPesa are also about to launch.

Besides startups, Kenyans should watch out for upcoming crypto events such as a mining class that Mutahi will be teaching. The mining class targets those interested in mining as individuals as well as cloud mining.

** This article has been retrospectively corrected by the editor.

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Zimbabwean Exchange Golix Adds Ether and Bitcoin Gold to its Trading Platform

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Golix Adds Ether and Bitcoin Gold

While Zimbabwe has had its fair share of political woes this year, the adoption of cryptocurrencies in the Southern African country has continued to grow. This is evident by the increasing trading volumes on its local bitcoin exchange Golix.

In a bid to boost cryptocurrency adoption in the Southern Africa nation, Golix – Zimbabwe’s only local cryptocurrency exchange platform – has added bitcoin gold (BTG) and ether (ETH) to its trading platform. This brings the total number of digital currencies on the exchange to six.

In an interview with The Financial Gazette, Golix’s Growth Manager, Panashe Tapera said,

“It is our belief that digital currency will form the basis of the future of finance, our mission at Golix is to bring digital currencies to everyone in Africa.”

While adding Ethereum’s ether is a good move considering that it tops the charts on the top ten altcoins and is popular, the case might be different for bitcoin gold.

Bitcoin Gold’s Existence

The key reason for the creation of bitcoin gold was to decentralise bitcoin mining. Bitcoin gold came to be after an October bitcoin hard fork.

A hard fork is an irreversible blockchain split that occurs when there is a software upgrade that is enforced but is not supported by a segment of the network. Whenever a fork happens, a different form of bitcoin is created. In 2017, bitcoin experienced two hard forks.

Although by market cap it is a top ten cryptocurrency, bitcoin gold is not as popular as bitcoin or Ethereum globally. While the move by Golix is a smart decision and is aligned to their goal ‘to bring digital currencies to everyone in Africa’, the question on whether the demand for bitcoin gold will soar in Zimbabwe or not, is yet to be seen.

With about 70 percent of the population in Zimbabwe unbanked and looking at digital currencies as an alternative form of investment and a way of regaining financial control, the central bank of Zimbabwe still considers bitcoin illegal due to its lack of a legal framework.

As Golix continues to make efforts to push for adoption of cryptocurrencies, it is only a matter of time before the impact will be felt in Zimbabwe and in Africa.

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