Connect with us

Bitcoin

“Bitcoin has huge potential in Africa.” – An Interview With BitHub Africa’s John Karanja

Published

on

Bithub Africa

On the 25th of August, I had the pleasure to interview BitHub Africa‘s founder John Karanja in his office in Nairobi. During our conversation, we discussed the potential and the challenges of bitcoin adoption in Kenya and Africa.

BitcoinAfrica.io: How do you see the current situation for bitcoin in Kenya and Africa in general?

John Karanja: I think bitcoin is still in the early stages, even beyond Africa. In Kenya, we see bitcoin adoption is mainly with speculators and traders who are buying and selling bitcoin to make money. Volumes have been growing over time. I think it’s about 10 million shillings weekly, which is around $100,000 traded every week on the peer-to-peer platform LocalBitcoins.com.

BitcoinAfrica.io: Is LocalBitcoins the main exchange used in Kenya?

John Karanja: Yes, it is. Bitcoin in Kenya is still are a very early stage. There are start-ups that have come and gone because it appears that bitcoin is not ready to scale amongst the average person here. Hence, it’s not going to compete with the mobile money system M-Pesa, for example, at least in the short term.

I think what we’re seeing is now more focus shifting to blockchain technology, being used in other use cases like identification systems, data storage or smart energy. We’re applying ourselves in these different areas to see which are the most viable and we will then launch our projects after doing so. In fact, we’ve produced a report on blockchain opportunities in Africa that goes into depth on that subject. The report, titled The African Blockchain Opportunity, was officially launched at the AITEC Summit in Nairobi on the 31st of August. The reason we produced the report is to provide the information about the potential opportunities that the blockchain technology is creating in Africa for entrepreneurs.

That’s where we are at the moment. We’ll probably launch our first project in early 2017 using the blockchain. So far, our work has primarily been focused on research and development here at BitHub.

BitcoinAfrica.io: To touch on the point you made about the move away from bitcoin to the blockchain. Do you think that, while the initial bitcoin in Africa story was remittance and supporting the underbanked population, there is a move away from that to a focus on the blockchain for commercial users as it very much is in the Western world now? 

BitHub AfricaJohn Karanja: I’d say they’d go in parallel because bitcoin has a lot of inherent advantages over any other secondary blockchain platform, in that it’s the most secure, it has the largest user base, it has a lot of liquidity and there’s money going in. But in terms of the user experience, it’s not quite mature yet. However, there are a lot of people working on improving that. So I think that will eventually be resolved but the technology is so disruptive that it can be applied to so many areas, some of which are fairly simple like storage of data, for many small enterprises getting cloud systems or complying with KYC. For these types of systems, the cost is often quite prohibitive. So what the blockchain can do is streamline that and open access to everyone. Identifying a customer, then also supplying him the products and enabling payment. So the blockchain can cover that whole process from start to finish. I see both bitcoin and the blockchain moving together.

BitcoinAfrica.io: Do you think bitcoin remittances will still be a growth market in Africa? One thing that you have now is there are so many low-cost remittances services, such as World Remit, TransferWise and CurrencyFair. Do you think that because of them, bitcoin for remittances is not going to be such a big growth market anymore as the cost of exchanging bitcoin back into local African currency can be quite high at times when using peer-to-peer exchanges as Citigroup pointed out in a recent research piece?

John Karanja: Bitcoin is not the clear winner yet when it comes to remittances. However, it is very much a possibility that it will be integrated into the background. For example, WorldRemit could end up using it for settlements, rather than pushing customers to use bitcoin. And we shouldn’t forget that there is still huge risk associated with bitcoin as its infrastructure is still relatively underdeveloped.

At the end of the day, it’s a protocol, it’s not an application. I don’t think anyone can say for sure bitcoin is dying or Bitcoin will succeed. But there’s also the possibility that we’ll see better technology rising very quickly and learning from what Bitcoin has been able to achieve.

BitcoinAfrica.io: Aside from Kenya, Nigeria, Ghana and South Africa, which country do you think will be the next African country to witness a reasonable rate of bitcoin adoption and the growth of a local bitcoin ecosystem?

John Karanja: I think those are the main countries. Possibly we could also see Rwanda because Rwanda has a very aggressive education platform that is aiming to leverage technology. I think that’s one country that’s usually left out, but it’s mostly those countries that have already advanced in terms of the internet and social media adoption. You can just look at Facebook statistics and see the countries where Facebook is heavily adopted. Those will be the likely next adopters of Bitcoin.

BitcoinAfrica.io: I read about how the telecoms giant Safaricom banned Bitcoin on their mobile money platform MPESA. Do you think that the “Safaricoms” in the other African countries will also try to hinder Bitcoin innovation to prevent their mobile payments systems from disruption?

John Karanja: That’s a good question. I’d say right now, ironically, more Bitcoin is traded using M-Pesa than ever before because of LocalBitcoins. They wouldn’t really be able to stomp it out but what they’d be able to do is restrict other centralized entities from using bitcoin as a platform to scale because obviously, they would be potential competition to them.

There may be room for telecoms innovating using bitcoin, but that would be very risky because bitcoin and other cryptocurrencies seem to work best in a peer-to-peer format because the risk is distributed as much as possible. If I’m sending you Bitcoin you send me M-Pesa, it’s just me and you. The counterparty risk is between me and you. It’s not in a centralized place that can get hacked. My guess would be that peer-to-peer platforms are where Bitcoin would dominate.

I don’t know if you saw the President signed the law that caps the interest rates at 14%?

BitcoinAfrica.io: Yes. I read that.

John Karanja: That’s the kind of situation that can now allow for bitcoin to triumph because the banks will not be too interested in micro-lending and may wish to partner with fintech solution providers to provide liquidity in that market segment. Therefore, people will now move more towards peer-to-peer or social lending platforms. I think in a peer-to-peer world bitcoin could dominate. The question is how simple can the peer-to-peer applications become? Because the peer-to-peer ecosystem is not really developed enough to be a safe and secure way to transact in digital currencies.

BitcoinAfrica.io: What are your thoughts on Ethereum and what do you think about ether from an investment point of view?

John Karanja: We did a study on it. It’s in the report. I believe Ethereum will have much more challenges than Bitcoin because they’ve used a high-level computer programming language called Solidity that essentially allows you to program ‘what if’ statement. But now, as they’ve realized from the Dao attack, by doing so that they opened so many vulnerabilities for attacks. For them to plug that, as a developer, I see that being more difficult than using a low-level platform like bitcoin where the rules are fixed. There are few rules and they are fixed. On the bitcoin platform, there’s no variation on what can happen. We know what can happen on that platform.

Ethereum, I would call ambitious but the advantage they have is they are secure. They have a good amount of miners behind the network. They’ve managed to attract enough interest in terms of safeguarding and keeping the platform that if they figure out their niche, it could advance blockchain technology even further.

BitcoinAfrica.io: My last question is about The African Blockchain Opportunity report that you have published. You mentioned it briefly earlier. Could you elaborate on it, please?

John Karanja: Essentially the whole idea behind the report is to provide a manual that anyone can pick up, whether it’s a developer, a bitcoin enthusiast or an entrepreneur and read up on areas of interest. It covers the technical aspects of bitcoin and the blockchain technology within an African context.

There are also a couple of chapters on fintech and we also have linked several developer resources. A developer can go and look at the source code and then try to either contribute or fork it and develop it as an application. We’re now going to be using that for our training curriculum. Then hopefully the idea is to have a second edition maybe in one or two years from now with updates.

Bithub Africa - The African Blockchain OpportunityBitcoinAfrica.io: Thank you for taking the time to conduct this interview.

If you want to find out more about BitHub Africa visit their website and if you would like to purchase the report The African Blockchain Opportunity click here or on the banner on the right. If you would like to reach out to John directly, you can find him on Twitter at @BitHubAfrica

Terra Credit

Bitcoin

BitClub Network: The Rise And Fall of A Bitcoin Mining Scam

Published

on

Bitclub Network

Operators of the prominent bitcoin mining company, Bitclub Network, have been arrested and charged with fraud by the US Department of Justice in December 2019.

In this article, you will learn about the rise and fall of the BitClub Network scam, which has defrauded thousands of bitcoin investors.

What is BitClub?

The BitClub Network is a company that claims to enable individuals to make money through bitcoin cloud mining. Since BitClub was established in 2014, it has been in the spotlight for supposedly using MLM strategies to defraud investors.

BCN claimed on its website (before it was taken down) that it is a “team of experts, entrepreneurs, professionals, network marketers, and programming geeks who have all come together to launch a very simple business around a very complex industry.” These unspecific details about the people behind the company should have been the first warning sign.

The founders of BitClub Network have been anonymous for a long time. Only convicted sex offender, Russ Medlin, was associated with the bitcoin mining scam. However, recent arrests have brought to light other people that could be architects of the investment scheme.

Plenty of Red Flags

In addition to the acute lack of information about the company and its operators, the list of red flags was long.

  • Investors have to pay $100 to join BCN. They then choose from three packages of $500, $1,000, and $2,000. Considering that you can join other mining pools for free, BCN does not look attractive at all.
  • Generally, earning profits through bitcoin mining is difficult but on BCN, this is almost impossible. For example, an investor wrote on Steemit that he was earning $0.34 daily in 2017 with BCN’s $500 package. It would have taken nine years or more for him to get a return on his investment. But since the contract was only running for 600 days, he was never going to make any profits.
  • You can only sign up for an account on BitClub if you have a sponsor. This is characteristic of MLM schemes that thrive on referrals.
  • Russ Medlin is a convicted sex offender from the US associated with various BitClub Network YouTube videos and blog posts. He is considered the “Master Distributor” and unofficial “Owner” of the scheme.
  • Ofir Beigel, the founder of 99Bitcoins, states that the company used a criminal’s picture under a different name to display a customer testimonial. The photos were later taken down after the misrepresentation was discovered.
  • Investors are encouraged to reinvest their cloud mining earnings, which is a tactic MLM companies use to stay alive.
  • Many BitClub YouTube videos that were suspicious were deleted after catching attention from reviewers.
  • BitClub launched a “digital currency” that had no value outside its platform.

The Rise

Bitclub Scam

There is no doubt that the BitClub Network has been aggressively marketed. From Facebook and Telegram groups to Reddit, BitClub promotions have been all over social media. This attributed to its steep growth.

Although the hype surrounding making money with bitcoin is not what it once was, BCN has convinced a lot of people that they could get rich through bitcoin mining. After five years, some investors, if not all, are reportedly regretting their decisions after losing thousands of dollars to BitClub.

In Africa, BCN was just as popular as anywhere else in the world and social media was a key recruitment tool. An example is the Facebook page, BitClub Network South Africa, which is asking people to join.

Using the “fake it till you make it” approach, the leaders of the scheme defrauded investors $722 million even though earlier reports showed that the Network was contributing to bitcoin’s mining activity. However, the information from the recent arrests reveals that the BCN operators were displaying fake mining numbers to investors.

The Fall

Bitclub Network Scam

As with any Ponzi scheme operators, the law is bound to catch up with them. This is what happened to Matthew Goettsche, Joseph Abel, Silviu Balaci, and Jobadiah Weeks, the alleged operators of BCN.

The US District Court prosecutors charged the four with fraud in December 2019 with regards to the BitClub Network Ponzi scheme.

While these arrests could have brought the company to its knees, Russ Medlin, a well-known name in the BitClub Network scam, has not yet been charged.

The arrests revealed that the operators were making millions of dollars while using a small fraction of the money they received from new investors to pay the old investors. Interestingly, the leaders of BCN were not shy to state in their correspondence that they were out to profit from “the typical dumb MLM investor.” In January 2015, Goettsche told Balaci:

“We are building this model on the backs of idiots.”

Lessons Learned

The story of Bitclub is a great lesson for new and future crypto investors. There is a lot we can learn from a bitcoin scam that has been able to operate for so long.

The key points are:

  • Always do your research before investing in any opportunity
  • If you cannot find clear details about the founders of an investment company, do not invest
  • Always regard with suspicion any investment opportunity that asks for registration fees
  • Anyone who promises returns is most likely lying
  • Bitcoin mining is making people money but not as fast as you think
  • Never invest in something you do not understand

The ugly side of crypto is real. There are people intentionally starting crypto scams to make money from unsuspecting investors. Therefore, it is important to stay vigilant and to research the companies you plan on doing business with.

Terra Credit
Continue Reading

Bitcoin

November 30, 2019: OKEX and BitcoinKE Partner for a FREE Crypto Margin Trading Class

Published

on

FREE Crypto Margin Trading Class

After a full-house event in Nairobi for the CrypTour through Africa, OKEx is back again to host its popular Genesis Trading Classe, titled “Crypto Margin Trading.”

The class will cover the following:

  • Basics of crypto trading
  • Trading tools
  • Margin trading
  • Reading of trading charts
  • Trading psychology
  • among other topics.

You don’t want to miss this exciting class!

Come and network with other crypto enthusiasts over drinks and snacks. There will be a jam-packed list of speakers who will also be joining for this class.

forex trading indicators

EVENT DETAILS:

DATE: SATURDAY, 30TH, NOVEMBER 2019

TIME: 11:00 AM – 5:00 PM

VENUE: MARBLE ARCH HOTEL, LAGOS RD, OFF TOM MBOYA STREET, NAIROBI, KENYA

REGISTER: http://bit.ly/BITCOINKEOKEX2019

Terra Credit
Continue Reading

Bitcoin

Retired NBA Player Allegedly Scammed Ghanaian Company Out of $825,000 in Bitcoin

Published

on

NBA Player

Retired NBA player, Isaac Edward Austin, has allegedly scammed a Ghanaian Company out of $825,000 in bitcoin (BTC). The money was reportedly acquired with the promise of investing it in a bitcoin automated trading programme.

Bitcoin Investment Scam

bitcoin doublerThrough the Isaac Edward Austin (IEA) and Tudor Trust, Austin reportedly masqueraded as a trustee with the ability to help a Ghanaian company make a profit on a bitcoin investment. The two parties signed a contract on July 3, 2019. This contract is among other documents that have been shared on mynewsgh.com indicating the scam took place.

The company sent to a bitcoin investment at a strike price of $11,000 per bitcoin, totaling to $825,000, to Austin expecting to receive back the original investment plus profits. However, Austin failed to make the payment at the close of trading as per the agreement.

A victim of Austin’s scam shared his experience as follows: “He will take your BTC and you will never get your investment back or your returns. On the day of payment, he will tell you story after story filled with lies of issues why the BTC could not be delivered on the day of payment. From him having a heart attack, to the coin being sent to the wrong wallet, to him being in a queue at the bank, to him waiting for the trade to conclude, to the funds being held by the bank. Week after week after week of unresolved issues even when he has confirmed the day before that all is set 1000 percent to deliver and conclude the transaction. He is a fraudster of the highest order. Stay away from him. We have all the proof – contracts, letters, and messages.”

One of the other documents mynewsgh.com obtained is a letter sent to Austin notifying him of his failure to meet the agreed terms of the contract. The Ghanaian company expected their money back on the same day they signed the contract with Austin. The funds expected should have been 75 BTC going for a strike price of $11,000.

In the letter, the company gave Austin 48 hours to pay them their money – failure to which they were going to take legal action.

Is the Scammer an Imposter?

According to the documents shared on Ghana Web, the bitcoin scammer’s date of birth and height is similar to the former NBA player, Isaac Edward “Ike” Austin as indicated on Wikipedia. So, could this be a case of a retired basketball player turning into a scammer or is someone impersonating him? The answer to this question is unclear.

This LinkedIn profile of an Isaac Austin, who has been the Finance Director and Trustee of Tudor Trust and Finance Society LLC since June 2012, does not seem authentic. Although this profile has some similarities to the former NBA player’s personal information as written on Wikipedia, the years he attended Arizona State do not coincide.

Furthermore, the profile on LinkedIn says Isaac Austin took a Bachelor’s Degree in Liberal Arts and Sciences for one year which is not the usual study period for a degree course. There is also no mention of the former NBA player being a trustee of IEA and Tudor Trust.

The upturn of the crypto market experienced in mid-2019 appears to have spurred scammers into action. This scam comes after another bitcoin investment deal in Nairobi went wrong between December 2018 and May 2019.

That said, these scam stories are a lesson to potential bitcoin investors that they are better off managing their own investments as opposed to handing funds to someone to manage them. If the Ghanaian company had carried out thorough research, perhaps they would have noticed the obvious red flags.

Terra Credit
Continue Reading

Popular Posts