Opinions Tue, 18 Jun 2019

How financial education can help people understand the cryptocurrency market better

Africa is slowly but surely recognising the positive effects and benefits of cryptocurrency. Local governments and national banks are putting down their pitchforks and seeing how cryptocurrency and blockchain technology can harness the potential of their citizens.

One of the core reasons why African establishments did not embrace digital currencies from the start is out of fears that their decentralised and unregulated nature can increase the chances of scams and their citizens falling victim. Local regulation is one way of combating scammers, fraudulent activity and criminal schemes - but it is not the only or best solution.

Regulating cryptocurrency across African territories will go some way to preventing crimes and scams, but it is not enough. Local residents may also fall victim to other companies that are located elsewhere. A USA-based company could easily lure Africans into in-genuine schemes. Instead, financial education is what will keep Africans safe when dealing with cryptocurrency.

Using Legitimate Products and Services

One of the key areas where citizens need education is in the market of crypto products and services. For example, recognising a bitcoin wallet from products that are not secure and can easily be compromised is key. To find out the proven and genuine products, research and networking is key. Looking at reviews, reading financial publications and speaking with experts will go a long way to ensuring your protection against scammers.

But Who Is Responsible for Financial Education?

There is an argument that if citizens wish to use cryptocurrency, it is their responsibility to educate themselves. Others believe institution should protect their citizens with valuable financial education. Equipping citizens with knowledge is the approach taken by South Africa and a role model to the rest of the continent.

The FSCA in South Africa has provided a three-part education system explaining cryptocurrency from the point of law and regulation, research and managing a portfolio. The results of this financial education programme are believed to be positive. Fewer investors have been subject to scams and the information has increased their scepticism of some in-genuine companies.

What Other Resources are Available?

Not everyone has access to the guidance published by the FSCA. However, African governments could effortlessly outsource education to other specialists outside their country if needed, such as those specialists in South Africa. Yet, investors and crypto enthusiasts may also take financial education into their own hands. Many crypto platforms and service providers do offer portals where users can access free information. One example is Luno who not only provide one of the most secure bitcoin wallets but a comprehensive Learning Portal as well. This platform is geared up to prepare cryptocurrency newbies for confusing terms and provide key information.

Last Thoughts

As cryptocurrency continues to grow in Africa, those that want to be involved with cryptocurrency should utilise financial education to protect themselves from an often-unregulated industry. African banks, governments and regulators can contribute to their safety by implementing regulations, but providing financial education may go further to squashing their overarching concerns about cryptocurrency.
Columnist: Chris Benson