Anna Collard, SVP Content Strategy and Evangelist at KnowBe4 Africa.

While cryptocurrency has gained traction in Africa, touted as an alluring solution to soaring interest rates and ravaged local currencies, it does introduce risk – and there are those that will find innovative ways to scam the system, con users and pilfer funds.

This is according to Anna Collard, SVP Content Strategy and Evangelist at KnowBe4 Africa, who said: “People need to become familiar with the threats of social engineering as well as common scams so they can protect themselves, their digital assets, their wallets and ultimately their money. The cryptocurrency ecosystem is still very much the proverbial Wild West with criminals making immense profits off of people who are not sure of the rules. It’s essential that anyone playing in the crypto ecosystem understands the risks involved.”

Exponential increase

KnowBe4 Africa refers to statistics raised by the United Nations Conference on Trade and Development (UNCTAD) which affirmed cryptocurrencies have gained global traction during the pandemic “increasing exponentially and gaining an impressive foothold in Africa”.

According to UNCTAD, there are currently more than 19,000 cryptocurrencies available, 1,500 in 2018, and 450 crypto-exchanges that achieved a combined value of US$500-billion in daily trades in May 2021.

The African countries currently leading the cryptocurrency charge are Kenya, South Africa and Nigeria with one of the largest hubs on the continent sitting in South Africa.

As recently as June 2022, the Central African Republic adopted bitcoin as legal tender, and a Chainalysis report revealed a 1,200% increase in cryptocurrency payments from 2020 to 2021 in Africa.

That said, there remains immense potential within the digital bank vaults of cryptocurrencies, said Collard, who mentioned the metaverse as an emerging avenue of opportunity.

“While it is still a fledgling concept that’s mostly hype and conjecture at the moment, it’s important that Africa is not left behind in the discussion,” she said.

“A July 2022 KnowBe4 and ITWeb survey unpacked what South African organisations think about the metaverse, NFTs, blockchain and Web3. Just over half (56%) said they had plans to participate in the metaverse while the majority (82%) said their business doesn’t use blockchain technology, around 83% said they had plans to do so in the future. There is clearly a positive sentiment towards the metaverse and its potential, but organisations are wary of the risks.”

The survey found that around 28% of respondents had concerns around the security and risk factors that come with cryptocurrency, and at least 30% said they were planning to update their security strategy while 14% said they had already put well-defined security controls in place, specifically to address these emerging technologies.

Collard added, “Organisations getting involved need to collaborate with their security and risk teams early on to identify what could be at stake and where possible vulnerabilities are. They need to ensure that developers are adequately trained, apps thoroughly tested and audited, and that end-users are aware of the risks. It’s also important for regulators and policymakers to come up with regulations that can be applied to the metaverse and cryptocurrencies and that can protect vulnerable groups and consumers, without stifling innovation.”

Today, the emergent blockchain based technologies and conceptual worlds that surround them may still be in their infancy, finding their feet and their way, but they are proving to be more than just passing fads that will fade with time.

Moving forward, both consumers and companies playing in this space need to prioritise security and risk awareness to ensure that their investments remain secure, and their experiences positive, Collard said. “End-users need to be aware that participating in any new technology makes them a bigger target, so plan ahead, be aware, and recognise the risks.”