Cryptocurrencies Surging in Africa as Alternatives to Traditional Banking

Africa is rarely considered to be one of the larger markets for cryptocurrencies, but with the right factors in place — such as an increasingly tech-savvy populous and inflation triggered by central banks — that might be set to change.

Case in point: The surge in popularity of cryptocurrencies has contributed to the opening of at least 15 new trading venues in South Africa within the past year alone. And peer-to-peer marketplaces also recorded a surge in trading volumes as Bitcoin’s price reached historic highs at the end of last year.

Global wallet and exchange Luno reported 2000 BTC worth of transactions in November 2017, when the coin’s price was hovering in the $10,000 range, and approximately 37% of those transactions occurred in South Africa. Luno began operations in 2013 and boasts 1.5 million users spread across 40 countries — including Indonesia, Malaysia, Nigeria, South Africa, and the U.K. The company has big plans: By 2025, it plans to reach 1 billion customers. To put that in context, North America’s largest cryptocurrency exchange, Coinbase, had 11.7 million users last year. 

The South African government is also making moves. The country’s central bank has launched a program that will trial JPMorgan’s Quorum blockchain in interbank clearing and settlement. According to an official statement dated February 13th, the South African Reserve Bank (SARB) revealed it has established a fintech program that will prioritize, among other things, a project dubbed Khokha to explore a proof-of-concept (PoC) using the tech.

Why is Africa Becoming Such a Big Market?

First, conditions in the continent are conducive to the adoption of cryptocurrencies — with many countries in the continent such as Zimbabwe, South Sudan, and Nigeria, suffering from rampant inflation. What makes cryptocurrencies so appealing is their decentralized method of operation, permitting them to become alternatives to fiat currencies that have been de-railed thanks to disastrous central banking policies.

Second, the increasing use of mobiles and other computing technology within the continent has helped its population become comfortable with cryptocurrency technology. New businesses that use blockchain are emerging all the time: Kenya-based BitPesa, for example, is a payment platform and money transfer service that works with 60 banks around Africa and has seven mobile wallets on its platform.

Third, the threat of government regulation, which has roiled cryptocurrency markets recently, is (presently) fairly low in Africa. While governments and agencies have warned about the dangers of investing in cryptocurrencies, regulators in African countries have taken a hands-off approach to trading at exchanges.  

But Africa is susceptible to the same pressures as cryptocurrency markets in other parts of the globe: Cryptocurrency traders in Africa were paying a premium of as much as 40% in 2017. According to reports, the premium occurred due to a shortage of liquidity, meaning sellers were able to command unrealistically high prices due to high demand from buyers.

Outside the continent, other countries are also looking to cryptocurrencies to help solve their financial woes. Earlier this year Venezuela, which has been crushed by quadruple-digit inflation, announced plans to develop its own token, the Petro, in attempts to turn things around.

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Poland’s central bank — Narodowy Bank Polski (NFB)— has admitted to paying for social media campaigns that attacked the legitimacy of cryptocurrencies. The bank spent 91,000 zloty ($27,100) on the campaigns, with the money going to Google, Facebook, and a Polish Youtube partner network called Gamellon, reports. The news comes after the site published a letter from NFB in which it admits it paid for the anti-crypto campaign.

While it’s not unusual for governments or agencies to issue warnings or try to educate the public on what regulators may consider risky investments, Polish financial authorities have taken it a step further, spending taxpayers’ money on a smear campaign— trying to sway public opinion against crypto assets by paying social media influencers to attack them. The bank worked in cooperation with the country’s Financial Supervision Authority, Komisja Nadzoru Finansowego (KNF).

The money went to a Polish Youtube network that represents many popular, young content creators. A video with the title “I LOST ALL MONEY?!” — which depicted investments in cryptocurrencies in a negative light — appeared on December 8th on Marcin Dubiel’s channel, a Polish Youtube prankster who has over 900,000 subscribers.

Dubiel’s video, which has over 500,000 views, contains the hashtag #uważajnakryptowaluty. The tag is associated with the “Watch out for cryptocurrencies” website, which was set up by the central bank. The Planeta Faktów (Planet of Facts) Youtube channel was also paid to produce a video titled “10 differences between money and cryptocurrency that you need to know.”

Of note is that the video was not marked on Youtube as “including paid promotion,” and there is also no mention in its description that it is part of the campaign for which the NBP paid. Polish technology website Spider’s Web notes that this is against the law in Poland, where sponsored content has to be marked as such. Furthermore, judging by the quality of the content, its distribution channels, and its creators, the smear campaign appears to target a younger generation.

This type of attack, one that utilizes social media, is a fast-growing method for influencing public opinion. Over the past few days,  the U.S. Justice Department has charged 13 Russians and three companies in an indictment that unveiled a sophisticated network designed to subvert the 2016 election and to support the Trump campaign. It stretched from offices in St. Petersburg, to the social media feeds of Americans, and, ultimately, into the streets of election-influencing battleground states. The Polish Central Bank seems to be taking a similar approach, but this time to influence the public’s opinion on cryptocurrencies.

After questions were raised, NBP, in a letter dated February 9th, admitted that it “carried out a campaign on the issue of virtual currencies in social media.” As mentioned above, the campaign cost about $27,000 in taxpayers’ money.

Poland’s central bank is one of many across the globe that has issued warnings against cryptocurrencies and associated technology. The Monetary Authority of Singapore has urged citizens to “act with extreme caution,” while South Korea’s Financial Supervisory Service (FSS) has also warned people about investing in the virtual coins.

The business model most people attribute to initial coin offering doesn’t always hold up. The recent Telegram “ICO” shows how some of these offerings are no longer accessible to the public.

Changing the ICO Business Model

If Telegram’s recent funding is an example, the concept of an ICO is no longer public. While the company raised $850m, their way of doing so raises a lot of questions. An initial coin offering is usually open to non-accredited and accredited investors alike. Everyone can contribute money and receive something in return for doing so.

Telegram initially decided to use the ICO model to develop their TON blockchain. Additionally, some funds will be used to maintain the popular messenger service itself. Given the global popularity of this messaging service, a lot of people hoped to invest in this company with the money they could spare.

Unfortunately, these plans can never be executed. The company targeted venture capital firms and accredited investors first and foremost. By offering discounts for Telegram’s Gram token, the pre-sale resulted in raising $850m. This is well beyond the initial $600m target projected by the company itself. However, it is this odd approach which leaves a lot of people confused.

ICO vs VC Funding vs IPO

By targeting venture capital firms and accredited investors, the Telegram ICO is not all that different from traditional VC funding. Instead of receiving company stock, investors now received a Gram token. With this token, users can enjoy Telegram’s own independent payment system. It can be sued to bypass remittance fees, moving funds privately, or issue micropayments.

Moreover, by not allowing the public to participate, Telegram’s venture also resembles an IPO. Most of the total token supply and associated discounts are reserved for private rounds, the pre-ICO, and the eventual “public” ICO. Assuming the general public gets access to this Gram token, it remains to be seen if any bonuses will remain by that time. Additionally, with the pre-ICO raising more money, there are fewer tokens left to distribute during future rounds of funding.

These bonuses will also give accredited investors and VC firms a better chance of making a profit. Lower-priced tokens will increase in value based on demand. In the case of Telegram, that demand for Gram is overwhelming during these early stages.  Later investors will be left to proverbially “hold the bag”, so to speak. It is evident this change in ICO business model will not be to everyone’s liking. Mainstream fundraising will not change anytime soon, regardless of what “term” they use to designate this effort.

Analysts all over the world remain divided on the Bitcoin price topic. This currency’s value will likely soar to $25,000 in the next twelve months, say several respected analysts.

What Comes Next for the Bitcoin Price?

Bitcoin and other similar currencies have seen a major price drop in early 2018. Most markets lost nearly 50% of their value in a matter of weeks. Many people assume this is the end for cryptocurrency as we know it. True aficionados are not too bothered by this yearly cycle. Tone Vays, a New York-based analyst and consultant, remains positive about the future Bitcoin price.

In Vays’ opinion, Bitcoin will recover sooner rather than later. He is not too sure how high the value will go when the markets start to stabilize again. Reaching six-digit figures will prove to be virtually impossible at this stage. A more “modest” Bitcoin price of $25,000 by year’s end is in Vays’ books right now. Ronnie Moas, another famous Bitcoin enthusiasts, thinks along the same lines. His prediction puts the Bitcoin price at $28,000 at some point throughout 2018.

That optimism is not shared by everyone in the industry. James Rickards, strategic director at financial analytics firm Meraglim, is extremely bearish. Having a more balanced view from both sides of the spectrum is always needed. According to Rickards, the current valuation of Bitcoin is still far too high. Given the speculative nature of this cryptocurrency, it is evident the markets can swing in either direction. Rickards added :

“I don’t know how anybody could set and justify a price target that high for this year. I think bitcoin is going to go to $200. The only residual use is for criminals, and it will keep grinding down.”

Bitcoin Futures and South Korea

Speaking of interest in Bitcoin, there are some positive signs as well. We see a growing interest in Bitcoin futures offered by CME. Their volume for February 2018 currently sits at 1,101. It is the second-highest number for this week, indicating people have high expectations for the Bitcoin price moving forward. CBOE, on the other hand, has seen a volume of 4,225. These numbers are still low, but a definite improvement compared to a few weeks ago. The five-day average volume for both companies is rising. That won’t automatically translate to a higher Bitcoin price, though.

Last but not least, things are moving along in South Korea again. After a few rough weeks, the premium price for Bitcoin is increasing. This is often the result of lower market liquidity and people being forced to pay more per BTC. Bithumb and Upbit trade Bitcoin at nearly $11,400. The Western world trades $900 to $1,000 lower as of right now. This discrepancy has been present before as well. When it happened previously, the global value per Bitcoin soared to $19,000. History may very well repeat itself in this regard.

Key Points

  • Bitcoin price made a nice upside move and traded above $9,000 and $10,000 against the US Dollar.
  • There is a major ascending channel forming with current support at $10,150 on the 4-hours chart of the BTC/USD pair (data feed from SimpleFX).
  • The pair may continue to rise and the next major resistances are at $11,600 and $12,000.

Bitcoin price showing many bullish signs above $10,000 against the US Dollar. BTC/USD may correct a few points in the short term, but it remains supported above $10,150.

Bitcoin Price Support and Trend

This past week, buyers were in control as bitcoin price succeeded in breaking the $9,000 resistance area against the US Dollar. The upside move was strong and later the price even moved above the $10,000 level to register decent gains. The price is now comfortably placed well above the $10,000 level and the 100 simple moving average (4-hours). The recent high formed was at $11,160 from where the price started correcting lower.

An initial support is around the 23.6% Fib retracement level of the last wave from the $8,250 low to $11,160 high. More importantly, there is a major ascending channel forming with current support at $10,150 on the 4-hours chart of the BTC/USD pair. The channel support at $10,150 is very important since the same level was a resistance earlier and now it is a good buy zone. Moreover, the 38.2% Fib retracement level of the last wave from the $8,250 low to $11,160 high is near $10,040.

Bitcoin Price Weekly Analysis BTC USD

Therefore, if the price corrects lower from the current levels, it could find support near $10,000. On the upside, the price has to break the $11,160 level to gain momentum towards $11,600 and $12,000.

Looking at the technical indicators:              

4-hours MACD – The MACD for BTC/USD is placed strongly in the bullish zone.

4-hours RSI (Relative Strength Index) – The RSI is currently near the overbought levels, with no major downside sign.

Major Support Level – $10,000

Major Resistance Level – $11,600


Charts courtesy – SimpleFX

Key Highlights

  • ETH price succeeded in moving higher this past week to trade above $900 against the US Dollar.
  • There is a key ascending channel forming with support at $880 on the 4-hours chart of ETH/USD (data feed via SimpleFX).
  • The pair may continue to rise as long as the mentioned $880 support is intact.

Ethereum price is placed nicely in the bullish zone against the US Dollar and Bitcoin. ETH/USD is currently correcting lower, but it remains supported above $880.

Ethereum Price Support

There was a fresh start of an upside wave in ETH price from the $710 swing low against the US Dollar. The price gained upside momentum and moved above the $800 and $900 resistance levels. During the upside move, it traded above the 38.2% Fib retracement level of the last decline from the $1,229 high to $553 low. It also succeeded in settling above the $800 level and the 100 simple moving average (4-hours).

More importantly, there was a break above the 50% Fib retracement level of the last decline from the $1,229 high to $553 low. At the moment, it seems like there is a key ascending channel forming with support at $880 on the 4-hours chart of ETH/USD. The pair is following the channel nicely, but it may dip towards the $890-880 support area. It seems to be struggling to break the 61.8% Fib retracement level of the last decline from the $1,229 high to $553 low. However, the channel support near $880 is a crucial barrier for sellers.

Ethereum Price Weekly Analysis ETH USD

More importantly, 100 SMA is at $850 to act as the next key support. On the upside, the price has to move above the $970 and $990 levels to gain further upside momentum.

4-hours MACD – The MACD is currently showing a few positive signs in the bullish zone.

4-hours RSI – The RSI is moving lower towards the 50 level.

Major Support Level – $880

Major Resistance Level – $990


Charts courtesy – SimpleFX

Key Points

  • Bitcoin cash price gained heavily this past week and moved above $1,400 against the US Dollar.
  • There is a crucial bullish trend line forming with support at $1,480 on the 4-hours chart of the BCH/USD pair (data feed from SimpleFX).
  • The pair may decline a few points in the short term, but it remains supported near $1,450 and $1,400.

Bitcoin cash price is trading nicely in the bullish zone above $1,400 against the US Dollar. BCH/USD is likely to remain in an uptrend with resistances at $1,600 and $1,750.

Bitcoin Cash Price Support

There were decent gains from the $1,180 this past week in bitcoin cash price against the US Dollar. The price gained heavy bullish momentum and it was able to move above the $1,200 and $1,400 resistance levels. It even traded above the $1,500 level and formed a high near $1,617. At the moment, the price is correcting lower, but it remains supported on the downside above $1,400.

An initial support is around the 23.6% Fib retracement level of the last wave from the $1,186 low to $1,617 high. There is also a crucial bullish trend line forming with support at $1,480 on the 4-hours chart of the BCH/USD pair. The pair is currently showing a few bearish signs, but there are many supports on the downside at $1,450 and $1,400. The mentioned $1,400 is significant since it is the 50% Fib retracement level of the last wave from the $1,186 low to $1,617 high.

Bitcoin Cash Price Weekly Analysis BCH USD

Therefore, any major dips from the current levels are likely to find bids near $1,400. On the upside, a break above the $1,600 level is needed for a test of the $1,700 level, followed by $1,750.

Looking at the technical indicators:

4-hours MACD – The MACD for BCH/USD is placed nicely in the bullish zone.

4-hours RSI (Relative Strength Index) – The RSI for BTC/USD is moving higher towards the 70 level.

Major Support Level – $1,400

Major Resistance Level – $1,750


Charts courtesy – SimpleFX

Cryptocurrency mining operations come in many different shapes and sizes. 0Running a profitable Bitcoin mining firm requires a lot of hardware and space. For altcoin mining, things are very different. Unfortunately, the Jenkins Miner is not a legitimate operation. Although it is the biggest of its kind, it’s 100% malicious. It also seems to be mining Monero first and foremost, with over $3m being raised already.

Criminals have taken a strong liking to cryptocurrencies. In most cases, they will attempt to trick users into giving up login credentials. Hacking exchanges is also becoming more popular as of late. The Jenkins miner, however, is a different creature altogether. It is suspected this is a Chinese operation designed to mine Monero. More specifically, it is a completely malicious mining operation. By actively spreading Monero mining malware, the owner of this botnet has enslaved thousands of computers already.

Monero has a Jenkins Miner Problem

If that wasn’t enough, the owner is now targeting the Jenkins CI server. If successful, he can effectively generate millions of Monero in very quick succession. Botnet mining is nothing new for this particular altcoin. In fact, it has been somewhat of a problem for several years now. There is nothing one can do about it, though. After all, this is a decentralized network where no one can “ban” specific users or IP addresses without consensus.

There is a vulnerability in the Jenkins Java implementation which can be exploited. It seems the hacker successfully did so already, although it remains to be seen if this is a successful operation. With the code being injected on the server, it is possible this mining operation will become a lot more profitable. Monero is one of the few currencies to be mined with non-ASIC hardware these days. In fact, most people can still mine XMR with just their CPU, albeit at a very slow rate.

Whether or not the Jenkins miner will pose a big threat, remains to be seen. We do know the server is currently mining Monero through different mining pools. Analysts discovered how over $3m worth of XMR has been collected already. That number will increase for some time to come. Especially with this Jenkins miner still active, the money will continue to flow in rather quickly. The malware used to infect this server and other computers has undergone multiple evolutions as well. Every new iteration is more powerful and sophisticated. A worrisome trend, to say the least.

The rising popularity of cryptocurrencies is of great concern. Especially when it comes to pump-and-dump schemes, there’s reason to be concerned. As such, the CFTC issued an official warning against this type of market manipulation. They advise customers to avoid such schemes, especially when it comes to small and new altcoin markets. It is evident doing one’s research is always the best course of action.

In the world of cryptocurrency, pump-and-dump schemes are nothing new. In fact, they are a lot more common than some people might think. The CFTC has issued an official warning on this topic earlier this week.  This is quite a surprise, even though it is evident consumers need to be aware of these manipulative efforts. Especially smaller cap coins and new alternative cryptocurrencies pose a significant risk in this regard. Moreover, it is always best to avoid any promotion on social media altogether.

Avoiding Cryptocurrency Pump-and-dump Schemes

This seems to stem forth from the recent BitConnect issues. That pump-and-dump scheme caused hundreds of millions in financial losses. It was mainly promoted on social media and YouTube. The CFTC doesn’t want history to repeat itself in this regard. They now want consumers to blow the whistle on any suspicious currencies first and foremost. It’s always better to submit tips than ignore pump-and-dump schemes altogether. Whether or not the general public will follow this guideline, remains to be seen.

According to the CFTC, pump-and-dump schemes in the cryptocurrency world take place on social media first and foremost. Online chat rooms, such as the ones on Telegram, are also problematic in this regard. Ignoring these buy signals will prove to be rather difficult for a lot of novice users. It is these people the marketers and scammers prey on first and foremost. A lot of people never do any research for specific coins or projects, even though they really should.

For now, the CFTC will not undertake further action against pump-and-dump schemes. They are not in a position to do so either, unfortunately. It is evident users need to conduct their due diligence first and foremost. Those who purposefully defraud other investors will face legal issues sooner or later, though. Anyone participating in market manipulation also violates the law. It is evident this new financial industry needs some boundaries first and foremost. Cracking down on pump-and-dumps is the right way to go in this regard.