Tech
South African Teens Skip School to Chase Risky Cryptocurrency Dreams
John heard about it for the first time cryptocurrency three years ago, when the teenager stumbled upon a crafty YouTuber video AND Facebook posts from other South Africans who claim to have become rich overnight thanks to bitcoin.
Inspired, the 14-year-old downloaded a trading app, lied about his age to open an account, and began buying and selling cryptocurrency with his savings.
He soon made small profits, but when the cryptocurrency market crashed this year, John lied again: to his parents, Who did not know about his business activities – to obtain money to cover its losses.
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“I’ll give it back when I’m rich,” said John, who lives in Langaville Township, a poor neighborhood east of Johannesburg. He asked that his last name not be used.
John, who likes to wear designer T-shirts and jeans, said dozens of teenagers in his township also trade cryptocurrencies, hoping to emulate the influencers and self-proclaimed cryptocurrency experts they follow on Youtube AND User profile.
“Now I coach other kids in the community,” John told the Thomson Reuters Foundation in a park where he often hangs out with friends who also love trading cryptocurrencies.
“All you need is a cell telephone“, a bank account and some money, and I’ll show you how to make a lot of money,” he said, adding that he has about 20 clients who pay him a commission of R300-R400 ($17-$23) for showing them how to open an account and trade.
South Africa ranks eighth globally in terms of cryptocurrency ownership among the public: 7.1% of its population owned digital currency in 2021, more than Britain or Brazil, according to United Nations United Nations World Trade Organization (UNCTAD). Ownership is also high in Kenya and Nigeria among African nations.
A more recent survey, released this month by financial information firm finder.com, estimates that the percentage of cryptocurrency owners in South Africa is 10%, with the 18-34 age group accounting for 43% of holders.
While no data is available on South Africans under the age of 18, more and more young people are taking the plunge in hopes of getting rich quick, despite authorities and financial experts warning of the dangers of fraud, huge losses and mental anguish.
Young South Africans Choose Cryptocurrency Trading Instead of College education and finding a job without fully understanding the risks, said Asheer J. Ram, a lecturer at the University of the Witwatersrand.
“There is an allure to making money through cryptocurrency trading that can be very persuasive… but with the risks involved and the lack of understanding of those risks, it can be very damaging,” said Ram, who does cryptocurrency research.
FRAUDULENT SCHEMES
Cryptocurrencies were designed to be free from central financial authorities such as governments and central banks. They allow “peer-to-peer” transfers between users on line without any intermediary.
While it offers users in crisis zones and unstable economies an alternative, its relative anonymity also provides a haven for criminals, extremist groups, and sanctioned governments. A recent sharp drop in value has hurt many users.
South Africa’s central bank said last month it would allow cryptocurrency ownership and trading, as well as its use for remittances. But it remains poorly regulated.
Fraud is a major concern: The founders of a cryptocurrency exchange in the country, Africrypt, disappeared in 2021 after telling customers their accounts had been hacked. The loss of about $3.6 billion is among the largest cryptocurrency losses in the world.
And in June of this year, a U.S. regulator filed civil charges against a South African man and his company for soliciting Bitcoin from thousands of people as part of a fraud worth more than $1.7 billion in bitcoin.
South African police have warned the public about fraudulent cryptocurrency schemes, said Thandi Mbamo, a spokeswoman for the crime investigative unit.
“We are investigating the cases,” he said, without providing further details.
According to Ram, young people like John are particularly vulnerable.
“They may not fully understand the technological complexities and lack of regulation in spaceand problems around hacking of accounts and thefts,” Ram said.
“They get involved in making a quick buck. But they can get exploited and lose all their money,” he said, while also warning about the potential negative impacts on mental health. Health.
STRESSED OUT
Unbeknownst to his parents – who do strange things jobs for a living: John skipped school, looked up trading tips on YouTube, and tried to attract more clients with his flashy clothes and a photo of a stack of banknotes on his WhatsApp profile.
When he goes to school, he says he can’t concentrate, distracted by alerts on his trading app and tired from staying up late watching YouTube and TikTok.
Once a star student, John’s grades have dropped. But he continues to hope for success.
“In the township, life is not so easy. I want to grow my cryptocurrency business and make enough profit to start other businesses,” he said. “I think trading is my future.”
For John and other young, poor South Africans, finding well-paid work seems out of reach, given persistently high levels of unemployment.
Tiamo, 15, said he is stressed by the volatility and having to lie to his mother about what he does with his money.
Tiamo, who asked not to give his last name, has been interested in cryptocurrencies since receiving a spam WhatsApp message in March that read: “Did you know you can earn up to R85,000 in two days?”
He responded and started chatting with a 19-year-old who helped him open a cryptocurrency trading account and gave him some advice.
In the first week, Tiamo lost R1,000 of his savings. He told his mother he had been robbed and has since told her more lies and skipped school to trade to try to recoup his losses.
“One day I will succeed,” said Tiamo, who lives with her single mother and two siblings in Johannesburg’s KwaThema Township. “My mother is struggling to put food on the table. I can’t stop now.”
(Thomson Reuters Foundation)