For years, Stephen Aluko lived “hand to mouth” in Nigeria, home to a big but struggling economy in Africa with a high unemployment rate. He worked odd jobs, from running cyber cafes to “soft media” and videography, constantly mulling in the back of his mind if he would be able to pay for his next meal.
He was unemployed before hearing about bitcoin in 2017. At that point, his shoes hardly held together.
When Aluko decided to commit to trading bitcoin – buying and selling the cryptocurrency for profit – that all changed. At first he had second thoughts. He didn’t know what he was doing. But the side hustle worked out so well he’s now been trading the largest cryptocurrency full time for three years.
“My finances were not in a good state when I started trading, so you could say bitcoin trading saved me,” Aluko told CoinDesk. “I have made enough money from trading bitcoin that I have been able to get married and can live comfortably without any debts.”
This is one example of someone using bitcoin in an unanticipated way to improve his life. And there are many other examples around the world, from Argentina to Iran.
“The money I have made from bitcoin trading has made it possible for me to invest in other businesses, be financially independent and live debt-free. So, I do think I have made more money with bitcoin than if I had chosen another career path,” he said.
The recent bitcoin bull run didn’t have anything to do with Aluko’s success. CoinDesk talked to Aluko about the rise of bitcoin trading in Africa in August 2020, before the price of bitcoin surpassed its previous all-time high, launching into a bull run.
Aluko knows plenty of other traders who found themselves in a similar position.
“It’s not unique to me,” he said. “I know many people in Nigeria [who] trade bitcoin as a way to earn a living. I have also taught people how to trade bitcoin because I know how bitcoin trading has changed my life and I want to be able to help people.”
He argues that one factor driving so many people to trading is the high unemployment rate in the region. The situation has only gotten worse since Aluko was unemployed. In Nigeria, for instance, the unemployment rate has tripled over the past five years, swelling to 27%.
“Let’s just say that the numbers are not encouraging. There’s a chance that if I had worked hard and done a lot more applying to companies I may have gotten a decent job. But when I think about what I have achieved in three years as a result of trading bitcoin I am sure that I made the right choice,” Aluko said.
Other Africans have made the same career decision, giving bitcoin and cryptocurrency trading a try. African exchange Quidax CEO and co-founder Buchi Okoro said this is one of the key reasons people use the exchange.
“From our conversations with our customers, we have a lot of people using crypto to earn a living by trading as a full-time job,” Okoro told CoinDesk.
Bitcoin trading vs. speculation
Then there’s speculation, which is a bit different from trading. Speculation is investing in a risky asset, such as cryptocurrency, with the hope the price will go up and enrich the investor.
“Though bitcoin is used for speculation universally throughout the world, it hits differently in Africa,” KenyaCoin, a pseudonymous bitcoin enthusiast from Kenya, told CoinDesk, pointing to unemployment rates, as Okoro had.
“There are huge numbers of university graduates who simply cannot find employment in the country. Those with the means, especially those who studied economics, finance or tech, take up speculation in the crypto space to either try to supplement whatever income they do have or as a substitute for ’employment,’” he added.
KenyaCoin guesses that speculation is “the number one activity involving bitcoin and crypto on the continent.”
Risk of bitcoin and crypto scams
The rise of bitcoin and crypto in Africa has not necessarily been all rainbows, however.
There’s a dark side to this trend, too. Some people have gotten hurt from trading and speculation. Much like the rest of the world, as Africans have explored cryptocurrency as a route to a better income, some have lost money or have fallen for a number of scams.
Many Nigerians, for instance, first heard about bitcoin through MMM, a Russian Ponzi scheme that promised investors 100% returns. When MMM didn’t fulfill these lofty promises, participants lost their money.
KenyaCoin pointed to infamous cryptocurrency scams BitClub network and Onecoin as other examples of “bad” projects that have flourished in the region, as well as lesser-known scams such as Nurucoin and Crowd1.
“Scams often target victims in developing countries, as regulations in the finance and investment space are not always solid and/or enforcement is oftentimes lagging,” he said.
Bitcoin and other cryptocurrencies are still new so people in Africa – as well as the rest of the world – are still getting a handle on which cryptocurrency projects are actually useful for them rather than harmful.