“I am never going to trust in it ever again,” said Paula (not her real name), who works as a bank teller in a renowned banking institution in the Philippines. Despite her misgivings and her knowledge in the industry, Paula gave it a shot, hoping that her assumptions would be wrong.
“Now I know I was right all along; Bitcoin is nothing more than a scam.”
Unfortunately, a lot of people in developing nations have experienced being deceived by different crypto scamming schemes, and the sadder part is that some of them, like Paula, were deceived by people whom they once regarded as friends.
The Philippine Securities and Exchange Commission (SEC) released another statement on September 13, saying that it is extending the period for submission of comments on the proposed rules on initial coin offerings (ICOs) until the end of September. By this, we can assume that the long-been-awaited-for ICO and crypto exchange regulation isn’t going to be released anytime soon—at least not yet this month.
But the said regulating authority should expend as much effort as needed to craft the said law soon, since scammers are doubling down in their efforts to deceive many unsuspecting victims in many developing economies with the promise of instant riches and debt-free life.
Earlier this year, an email containing names of the Philippine President Rodrigo Duterte, along with several senators, was circulated over the Internet urging the letter’s recipient to invest in cryptocurrencies, with the promise of high rewards.
Even though the letter was obviously malicious and fraudulent, Presidential Spokesman Harry Roque had no choice but to address the issue, saying that President Duterte has asked him at least three times “to announce and inform the public” to not get involved with the scheme, and to not believe anyone who is “peddling their alleged influence” with the country’s chief executive, nor his kins.
The idea might sound too ridiculous and absurd, but, comical as it seems, this is really the case with the Philippines, as well as with other developing nations.
The Ultimate Price
Even now, many Filipinos are still falling prey to different scams. One popular example is The Billion Coin (TBC), which promises to give its members “the power to transform the world into abundance,” according to its website. It has a bizarre formula, named “The Ultimate Price”, wherein its native “crypto” will never drop in price; instead, it will always go up. The organization’s administrators’ goal is for one TBC to be worth one euro multiplied by the total number of verified members within the community.
For instance, if the community has about 10,000 verified members, then the price of each TBC is 10,000 euros per coin.
Of course, no one in his right mind would believe these preposterous claims. Or so we think.
According to an article from 99Bitcoins, the said scam is targeting people who are living in third world countries, especially those in the Philippines and in different countries in Africa. For instance, one post in a Facebook group showed some who are shopping for groceries in Mombasa, Kenya, claiming that it is the first TBC supermarket in the world. One Filipino commenter asked if there exists another in the Philippines, with the page administrator going as far as to say that they’re only “waiting for the implementation of all the malls.”
Furthermore, the site garners about 500,000 page visits per month, according to Similar Web.
Ignorance Isn’t Bliss
There are many Ponzi schemes that are being circulated across social media platforms in the said countries, each promising high rewards for members who are too naive to know otherwise. Most, if not all, got acquainted with cryptocurrencies such as Bitcoin as an investment asset, guaranteeing a ticket out of poverty and misery that they have been experiencing for so long.
But what’s sadder still is that there are those in these countries who are joining high yield investment programs (HYIPs), fully aware that the only way for them to make profits is by leeching off of new members in a vicious so-called pyramiding scheme. In a way, these people are deceiving their countrymen, knowing full well that the amount that they will be getting is, for the most part, the product of bitter tears and sweat.
In June, Andrew Smith, Director at the US Federal Trade Commission’s (FTC) Bureau of Consumer Protection, said that consumers have lost $532 Million to crypto scams in the first two months of 2018 alone, and that they are expected to lose more than $3 Billion by the end of this year.
Coin Center Director of Research Peter Van Valkenburgh also said that these frauds and scams occur because consumers are looking for higher profits for their crypto investments.
Van Valkenburgh said:
“If you yourself are not capable of explaining to somebody what a token’s supposed to do, you should not buy the token. If you can’t tell the wheat from the chaff, or what is techno-gibberish or actual innovation, you should not participate.”
“What Have We Really Accomplished?”
Earlier this month, Ethereum Co-Founder Vitalik Buterin said in an interview with Bloomberg that it’s highly improbable for us to see another 1000-times growth in the price of cryptocurrencies anymore, especially that many of the world’s average educated people have already heard of blockchain at least once.
He said that the growth of cryptocurrencies like Bitcoin through its first six to seven years was due to efforts for wider adoption. However, the strategy is nearing a dead end.
While it may be bad news for many crypto enthusiasts, Buterin provided another reason for being happy, saying that “ultimately if all that cryptocurrency is, is this thing that millionaires keep buying and selling to each other, then what have we really accomplished?”
In a recently published report, the World Economic Forum (WEF) also said that blockchain-enabled platforms could be used to streamline the crowdsourcing of funds from a larger number of diverse investors instead of just a few large investors. “Regardless of the number of investors,” the document read, “the decentralized framework could also significantly increase efficiency and lower transaction costs, both formal and informal.”
Slowly, the world’s leading authorities in the finance realm are acknowledging the use of cryptocurrencies and the technology underpinning it for daily use. And if Buterin were to be believed, then the greatest hindrance to crypto adoption is not its scaling properties—crypto is the obvious winner if we were to compare it with fiat money in terms of transaction speed and costs.
What crypto needs, more than anything else, is for people to be cured of greed, thinking that Bitcoin and other cryptocurrencies will make them rich by itself; if they didn’t purchase their share of Bitcoin before it went mainstream, then they probably won’t be rich now. People need to know that the Greater Fool Theory isn’t going to come into play anymore, since, as Buterin has so pointed out, many have already encountered cryptocurrencies in one way or another, and that many more scams and hacks have already been witnessed in the past.
If crypto enthusiasts do not change their approach to money, be it digital or fiat, then no system, regardless of its scalability or convenience, will ever improve our systems as a whole.
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