In the face of the growing number of reported peer-to-peer (P2P) platforms in Nigeria and other parts of Africa, public safety can only be protected by combating criminal activity and educating the public on blockchain.
Schemes such as MMM Global, MMM United, OneCoin, ZARFund, and e-Dinar have sprung up in parts of Africa promising returns as high as 30% monthly on investment.
"All investments opportunities have inherent risk," says Adeolu Fadele, founder and lead researcher at Cryptography Development Initiative of Nigeria. "The challenge with these markets is the absence of regulatory framework and consumer protection programmes. No one is educating the public on the risks profile of these schemes and how to make investment decision in the blockchain ecosystem in Nigeria."
Their proponents preach interdependence on one another for financial support as a member of the same community rather than on an established system like banks. Most of them transact with bitcoin digital currency as they tend to use these networks as a tool to be financially free from established monetary system that operates on fiat.
However, criticisms of these P2P schemes - some of which are linked with top digital currencies like bitcoin - have risen of late out of fear from questions surrounding their sustainability as a viable investment.
"It is not a question of authenticity, it is a question of sustainability," Fadele adds. "Ponzi scheme is the name given to any investment model that does not have real life value creation or asset."
Though several people have reportedly lost money to some of the schemes, calls for caution seem to have been ignored and it is being worsened by the decline in the economy as in the case of Nigeria.
Some of the major arguments against these platforms, particularly OneCoin which popular Nigerian blogger Linda Ikeji advertised, is that they do not have source code(s), no public ledger and there are no exchanges trading in their currencies as others.
Last month, the Central Bank of Nigeria (CBN) warned Nigerians to be careful of any deposit money institution that is not insured by the Nigeria Deposit Insurance Corporation saying it could not guarantee them and it would not be able to help when depositors lose money to them.
Nigeria seems to be the rave market for most of these schemes currently after their activities have been seemingly put under check in South Africa and reduced among Zimbabweans after their reported collapse.
Following its caution to the public, Kenya's Central Bank recently made some changes to its policy on digital currencies which made all bank accounts related to such business to be closed.
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