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BEWARE: All Bitcoin HYIPs and MLM Schemes are Scams!

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Bitcoin HYIPs

Bitcoin is the oldest and most popular cryptocurrency in the world. However, as bitcoin adoption is on the rise so is the number of bitcoin scams. Unfortunately, many of these scams have infiltrated Africa in the past few years and are preying on unknowing users who want to make money online using bitcoin.

In this article, you will find out why all so-called bitcoin high yield investment plans (HYIPs) and MLM schemes that involve bitcoin are outright scams and how to identify these schemes so that you do not fall victim to them.

What Are Bitcoin HYIPs and Why Are They Scams?

HYIPs (high yield investment plans) promise their “investors” very high returns on their invested bitcoin. The claimed returns (which are sometimes “guaranteed”) can range from 1 percent per day up to 100 percent per month, or more.

HYIP operators usually claim that they invest their “investors” bitcoins in a sophisticated way to generate high returns. Of course, that is a complete lie. Instead, they only pay out when new money trickles in through the registration of new “investors”, which is exactly why all HYIPs have well-paying referral programs that are there to lure new members to the scheme and to keep existing members propagating it.

In other words, all bitcoin HYIPs are simple and straightforward Ponzi schemes where existing investors are paid with the money coming in from new investors until the scheme collapses and the operators disappear with the funds. Due to bitcoin’s pseudo-anonymity, disappearing with stolen funds is easier than ever. Hence, the sudden growth in this type of scam.

No Protection for ICO InvestorsLegitimate cryptocurrency investment platforms, such as Iconomi, have annual management fees and transparently show their users what they are investing in and how their funds are performing. Also, users can pull out their invested funds at any time.

HYIPs, on the other hand, are always very secretive about their “investment” activities and it is hard to get your money out once you are in the scheme. Why? Because they are simply scams aimed at stealing their investors’ money once the pot has gotten big enough for the operators to exit.

What are Bitcoin MLM Schemes and why are they scams?

Bitcoin MLM (multi-level marketing) schemes take the popular element of network marketing (also known as direct selling) and leverage the popularity of bitcoin to create a scam.

It is very easy to identify a bitcoin MLM scam as they all have one thing in common. They do not sell a product or a service. Big companies that use multi-level marketing such as Herbalife, for example, have products that their direct sales people sell. When it comes to bitcoin MLM schemes there is no product and no service, which is why they can be so easily identified as just another pyramid scheme.

bitcoin scamMembers of bitcoin MLM schemes only really earn by recruiting new members, which is why you can find so many individuals posting referral links in Facebook groups promoting their “investment plan”, bitcoin doublers, (fake) cloud mining sites or MLM scheme.

The funds paid to their users are a small share of the new money from other participants. Those who join have to pay a fee. Then, the organisation pumps the amount into paying referrals. In the end, when the operators have earned enough the scheme collapses and they disappear with the money.

Alleged Bitcoin Scams in Africa

MMM

The recently reincarnated MMM is an alleged Ponzi scheme that has been around for decades. Its founder, Sergei Mavrodi, who ran MMM since the late 80s was found guilty by Russian courts in 2007 of defrauding 10 000 investors out of over $4 million in total and was sentenced to 4.5 years in prison. Unfortunately, after his release, Mavrodi relaunched MMM and targeted new markets, including Africa, for his scheme.

MMM came to South Africa in 2015 and has since spread to Nigeria, Ghana, Kenya, and Zimbabwe. The organisation promises a 30 per cent return on investments but gives no indication of how the business actually intends to generate these returns other than “individuals helping each other”. This should ring alarm bells as it clearly means that MMM is a pyramid scheme. Well, that and the fact that the company’s owner has already been convicted for running a Ponzi scheme with the same name back in Russia. Many governments were quick enough to caution their citizens about the scheme, yet MMM is still up and running in countries like Kenya and Nigeria and preying on unknowing bitcoin newbies who want to invest their coins.

According to reports by MoneyWeb, MMM South Africa collapsed in 2016 and its operators have disappeared with their victims’ funds. MMM announced on its South African Facebook page that the RB “was an experiment, and, unfortunately, it failed”. Victims who were involved in the scam, lost all their invested bitcoin as their accounts online were frozen as is traditionally the case when scammers collapse their schemes.

Onecoin

Onecoin is an alleged pyramid scheme that is claiming to have its own blockchain and cryptocurrency. However, no proof that its blockchain exists has ever been presented, whereas every other blockchain has a blockchain explorer where transactions can be viewed. Furthermore, its “digital currency” is not listed on CoinMarketCap as it is widely believed not to exist at all.

bitcoin hyipsAt the moment, Onecoin is under investigation by law enforcement departments in several countries across the globe including the UK, Germany, and India, where arrests were made.. Even the central bank in Uganda has warned its citizens about OneCoin.  Nonetheless, you will still find OneCoin “investors” send out promotional material with referral links to unknowing users online in the hope to make money by perpetuating the scheme.

MMM and OneCoin are two of the most prominent alleged bitcoin scams in Africa but there are much more. Many of them promise high returns from bitcoin cloud mining but are in reality just another form of Ponzi scheme.

How To Avoid Becoming Victim to a Bitcoin Scam

1. Ensure that company details and names of the owners are listed and real!

Most bitcoin scams will not list the company address nor have a team section that clearly outlines who runs the business and who the owners are. This is a clear red flag, so it should be the first thing to look out for.

If the company is legally registered and there are owners listed, go do a quick google search and see if these details are actually real. Fraudsters will happily provide false information in the hope that their victims do not conduct thorough research.

2. If the scheme “guarantees” you returns, it’s a scam!

If you come across a website or a system that guarantees you returns, it is almost certain to be a scam. There is always a risk when it comes to investing, so returns can never be guaranteed.

3. If the returns they state that they will generate for you are very high, that’s a red flag!

Despite the sometimes fast-increasing value of digital currencies, if you come across a scheme that tells you that it will double your bitcoin within a month or pay you 10 percent return per day, for example, you will have come across a scam with pretty much 100 percent certainty.

Just use common sense, how would a company be able to pay you 10 percent or even 1 percent returns per day other than by using the money from one investor and giving to the next as Ponzi schemes do? Bitcoin mining will definitely not make you 1 percent per day. That is mathematically impossible as we know how much the blockchain can pay out in rewards each day.

4. Read unbiased reviews online and reach out to users to hear about their experiences!

Another great way to check if an investment platform is legitimate is to find unbiased reviews and to reach out to users who have invested there. However, be wary of those who send you referral links or have them in their reviews as these opinions are not unbiased. Individuals who send you referral links when they give you their opinion are only looking to cash in on referral income, which is how participants in Ponzi schemes make money until the scheme collapses.

5. Check if the company is listed on badbitcoin.org!

The gentlemen who run the website badbitcoin.org provide an invaluable service to bitcoin novices who are tempted by high-returns promising investment schemes that are in reality just straightforward scams. The platform lists most known bitcoin scams and new sites are added on a regular basis.

6. The Golden Rule is: “If something sounds too good to be true, it probably is!”

Probably the easiest way to determine whether something is a scam or not is if it sounds too good to be true. If you are being guaranteed high returns that you can make passively online by “just” investing a few hundred dollars, you will almost certainly have come across a scam.

7. There are no legitimate bitcoin HYIPs or MLM schemes. They are all scams!

Finally, not falling for a bitcoin investment scheme in the form of a high yield investment plan or MLM/pyramid scheme is actually very easy because every single one that you come across online is a scam.

While there are many ways to earn bitcoin online, high yield investment plans and MLM schemes are not part of them and need to be avoided at all cost. If you invest in any of these schemes, you will very likely lose money sooner or later when their operators collapse the scheme and make an exit.

Unfortunately, African bitcoin Facebook groups are often full of individuals (usually with fake Facebook accounts) posting about “amazing” bitcoin investment opportunities that almost always include a referral link to a HYIP, MLM or a fake cloud mining scheme. So, keep your wits about yourself when looking for investment opportunities online and remember: “If it sounds too good to be true, it probably is!”

Bitcoin

Peer-to-Peer Bitcoin Exchange Cryptogem Launches in Zimbabwe

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Cryptogem

The peer-to-peer exchange Cryptogem Global has opened a branch in Zimbabwe’s capital, Harare, where it is offering bitcoin trading to Zimbabweans, despite the de facto cryptocurrencies ban by the Reserve Bank of Zimbabwe.

How Cryptogem Works

Melissa Mwale, Cryptogem Global’s CEO and co-founder, told Bitcoin.com: “Cryptogem Global is a […] bitcoin trading platform where people around the globe can exchange their local currencies and e-money to bitcoin.”

Currently, the platform allows for the conversion of fiat and electronic money into bitcoin and vice versa. In the future, Cryptogem wants to enable Zimbabweans to purchase products and services worldwide using digital currencies.

CryptogemTraders on Cryptogem need to make an initial deposit before trading. After this, they wait for a buyer to match their selling price. After agreeing on terms, Cryptogem automatically transfers the bitcoin to an escrow account until the seller confirms the receipt of the agreed payment. The transactions on Cryptogem typically take a few minutes to complete.

In regards to security, Cryptogem secures their users’ accounts using multi-factor authentication mechanisms. The exchange also plans to store a majority of the funds in hardware wallets to reduce their vulnerability to attacks. A small portion will be left online to facilitate quick withdrawals. Lastly, the server information is obscured using solutions developed by a reputable cybersecurity firm.

Operating Despite the Ban

Initially, cryptocurrencies did not have a clear regulatory framework posing challenges in the country. This year the RBZ imposed a de facto ban on cryptocurrencies by preventing banks from providing their services to bitcoin companies.

For this reason, Zimbabweans have had to perform bitcoin trades using alternative platforms, most of them lack proper security infrastructures.

However, legally the RBZ has no authority to prohibit cryptocurrency trading, meaning the central bank cannot close the crypto trading platforms. In fact, Golix the cryptocurrency exchange took the Reserve Bank of Zimbabwe after they tried to shut them down to court. The high court ruled in their favor and said that the governor of the Reserve Bank had no mandate over the cryptocurrency industry.

Regardless, the bank made sure that the exchanges would not continue running their businesses. Consequently, they ordered commercial banks where the platforms stored funds to close down the exchanges’ accounts.

Cryptogem Global exchange has, therefore, not opened accounts with Zimbabwean commercial banks. For this reason, RBZ cannot easily stop its operations.

To date, Cryptogem has traded over $2,000 worth of BTC and has approximately 300 members.

The Silver Lining

Despite the grim situation there is still hope for the crypto space in Zimbabwe. The minister of finance, Mthuli Ncube, recently encouraged the investment and regulation of cryptocurrencies in the country. He stated: “[…]Often central banks are too slow in investing in these technologies. But there are other countries which are moving faster. If you look at the Swiss central bank they are investing in – and understanding bitcoin.”

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New Research Highlights South Africa’s Increasing Interest in Bitcoin

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Increasing Interest in Bitcoin

Bitcoin startup Luno has commissioned a new research study, which has found that South Africa’s interest in owning cryptocurrencies is increasing.

Research Findings

research studyThe research study was carried out by Kantar TNS, a leading market research company, and balanced samples across key demographics, including age, gender, income, geographical region, education level, domestic status, and class self-identification. The survey used computer-assisted web interviewing techniques.

The study discovered that over 80 percent of South African consumers saw cryptocurrencies as an investment class and are ready to hold it over the long-term. Despite that, 48 percent of the respondents said that a major concern was losing money when using cryptocurrencies due to problems like phishing scams, with another worry being the use of non-trusted exchanges.

Luno said, “Greater stability in the price of cryptocurrencies was only the third highest factor (39 percent), which influenced confidence in the new technology among South African respondents.”

Despite the quick rise of new altcoins, people widely know bitcoin, and this includes South Africa. Ethereum also closely follows this as a popular cryptocurrency choice.

Around one third (29 percent) of the respondents already own cryptocurrency and 53 percent are interested in buying digital coins. There was only 18 percent of those surveyed declaring zero interest in owning any crypto asset.

However, according to the research study, 83 percent of those who already own a cryptocurrency consider it an investment, with 23 percent using crypto for online transactions and an even lower 12 percent using it to transfer money to friends and family.

Safe Investments

Of the respondents, 40 percent agree that cryptocurrencies offer a safe investment option, with as many as 61 percent considering it profitable. Three-quarters of the South Africans surveyed would also like to use cryptocurrencies in a shop or online store.

Interestingly only 58 percent of South African women were familiar with cryptocurrencies verses the 80 percent of South African male respondents.

Cryptocurrency has become increasingly popular in South Africa over the last few years. The rise of bitcoin has even seen the South African Revenue Service (SARS) introduce cryptocurrency tax laws requiring South Africans to pay income and capital gains taxes. This is a positive sign that even the South African government is on board with the use of cryptocurrencies.

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Will Bitcoin Return to its Old Shine?

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Bitcoin Predictions

Bitcoin is having quite a rough year. After reaching an all-time high of $19,000 last December, the cryptocurrency shed off more than 80 percent value in the first eight months of 2018. A market correction, declining investor confidence, and bad press have been blamed for the price crash. But will bitcoin ever rise again?

Bitcoin first crossed below the $10,000 mark on February 1. Since then, the digital currency has only crossed the mark twice. Bitcoin came close to reaching the mark in the first week of May, but it never did.

History

Throughout bitcoin’s history, the cryptocurrency has had ups and downs. Some of the downs have been soul-crushing to investors. But on the bright side, the cryptocurrency has recovered from every single price dip. Is anything different in 2018?

Many financial experts believe bitcoin is undergoing a price correction as most digital assets do. And like with every market correction, a price surge follows. Bitcoin’s problems this year will most likely end with a rise in value. You can also check this infographic by Playcasinoonline.net.

bitcoin return

After its bullish run in 2017, the cryptocurrency was expected to correct. Market corrections are commonplace in the stocks and bonds industries. It has happened before with bitcoin, and every crash was followed by a market rise. Although it has taken longer to rise past $10,000, that date will come.

Of course, the digital currency won’t gain value out of the blues. After regulatory threats by governments decrease, investor confidence on the cryptocurrency will increase. Increased adoption by banks and large financial institutions will also help bitcoin’s case. We may not know exactly when it will happen, but bitcoin’s correction will be followed by a rise in prices.

The Law of Supply and Demand

Bitcoin ETF ProposalsBitcoin’s prices are determined purely by the law of supply of demand. Governments don’t put a price on the cryptocurrency. When the digital currency’s demand increases, its price increases because more people invest. When its demand decreases, its price reduces.

For the better part of this year, bitcoin’s demand has been low. That is evident in the huge number of people dumping the cryptocurrency. Despite the low demand, something else is happening that could save bitcoin’s value. Its supply is reducing at a fast pace.

Bitcoin’s pseudo-anonymous founder Satoshi Nakamoto set a limit to how many bitcoins will ever be mined. That number is 21 million. As of April, 17 million bitcoins were mined. The remaining 20 percent will be mined in the cause of the next two decades. 

This year, bitcoin’s price has been dropping for a number of reasons. Some of the factors like low investor confidence will fade with time. Once that is done, investors will be met with high prices as bitcoin’s supply decrease. The longer the bear market continues, the higher the likelihood of bitcoin’s value rising later on.

Post Regulatory Threats

Bitcoin’s biggest nightmare is the threat of regulation all around the world. From Beijing to Seoul, Washington to London, governments are considering enforcing regulations on crypto. China already banned two crucial industries in the crypto world last year: ICOs and trading exchanges.

Earlier in the year, the Reuters reported that the Chinese government was threatening to ban any form of centralised trading and related businesses in the country. South Korea has also been introducing regulations that target bitcoin traders. The Japanese government and the US have also been contemplating similar moves.

China, South Korea, Japan, and the US ranked among the top 5 countries with high bitcoin trading volumes. Regulations in the countries have been influencing the industry hugely. As an example, some crypto’s prices in South Korea went down 20 percent after the government claimed it would ban crypto trading. After the statement was corrected, EOS prices went up 40 percent within hours.

Since the US Securities and Exchange Commission hasn’t made any clear regulations about bitcoin yet, the cryptocurrency is likely to continue struggling. Once regulations are put in place, bitcoin’s price will change. Most governments don’t intend to ban bitcoin entirely. In fact, most countries have been finding ways to incorporate bitcoin into their countries.

Once the uncertainty surrounding bitcoin’s regulation declines, bitcoin’s price will resume a steady path. While we can’t be certain which direction the coin goes, it’s highly likely it will rise. Many institutional investors are simply holding back to see what regulations SEC introduces. If the US and other countries back the cryptocurrency with favorable rules, it will rise again.

Low Volatility

OTC Bitcoin BrokerBitcoin’s has always had a volatility problem since it was launched. With no regulations in place, the digital currency’s prices are solely determined by what buyers want to pay. The prices have always gone sharply and then fallen in equal measures.

In recent months, bitcoin’s value seems to have stabilised. Maybe the cryptocurrency has finally corrected. But in the past six months, bitcoin has not lost more than 20 percent value in one month. Investors who have always feared the coin’s volatility problem are giving it a try.

Of course, many investors are still nervous about investing now that the cryptocurrency is on a bear run. But once the cryptocurrency resumes a bullish run again, investors will feel more confident to invest. 

Disappointing ICOs and Altcoins

As bitcoin grew in 2016, the initial coin offering industry was also booming. ICOs represent a financial model where crypto startups sell in-house coins in exchange for more established cryptocurrencies. While the industry had been growing sharply, things seem to have changed.

Investors no longer view ICOs and small altcoins as shortcuts to make big bucks in the crypto industry. A series of scam ICOs and underperforming altcoins has been shaking investor confidence in cryptocurrencies. Instead, the focus is getting back to bitcoin and other established cryptocurrencies. If more ICOs continue to disappoint, more people will get back to bitcoin and its value will rise.

To Conclude

Bitcoin has lost more than 80 percent its value since it peaked nearly $20,000 last year. There have been many theories about why it lost so much value. One theory pertains governments threatening to regulate bitcoin operations. Some argue the crypto is simply having a market correction and will get back to its old shine.

When and if that happens is anyone’s guess. But given that there is a lot of support for bitcoin-related technologies, its price will likely increase in the coming months.

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