Crypto Gist: How I got scammed when I started with crypto

Crypto Gist is a series that highlights the stories of real people around Africa around cryptocurrencies. Our guests share their crypto experiences - intro to crypto, wins, scams, losses and lessons. Would you like to tell your story? Don’t hesitate. Fill out this form to share your story

First of all, tell us what country you’re from.

I’m Nigerian.

So, when did you first hear about cryptocurrency?

2016. December 2016, to be precise. I remember hearing about how bitcoin was a new technology that you could use to make money. That was when I created my first bitcoin wallet on the Blockchain app. Back then it was Blockchain.info. Then I created a Luno account (it was still BitX then) too because they allowed you to buy bitcoin with naira. So I created my wallets and started using bitcoin.

How did you start using Bitcoin?

My friend told me about these Pyramind schemes and MLM platforms where you had to transfer your bitcoin to an address to make a donation and get your downlines to also make donations. Then you get paid in bitcoin.

What are downlines?

So, after joining these platforms, they expected you to bring others on board. Those you bring onboard are your downlines and payment from them come up to you. Your own payment goes up to those above you on the Pyramid.

I see. So you did that?

Yeah. For one, you were required to send 0.03 BTC at the Bronze level and take 1.4 BTC when you got to the Gold level. Back then 1.4 BTC was about #700k and as a serving corps member, that money was hoooge and I wanted it.

So you sent 0.03 BTC and got paid?

Haha, I can’t remember if I sent it or not but I know I didn’t get paid 700k but I made small money from those things then.

Was it only Pyramid schemes you used bitcoin for?

At first, yes. The next thing I did after that was MMM international or global, I can’t remember. Even though I was hesitant at first, the fact that I already could access bitcoin and they were accepting bitcoin which, in my mind, meant I was more likely to get paid since I could be matched with anyone around the world made me decide to do it.

How did that go?

How do you think? It ended in tears. About a week to the day I was supposed to cash out was when everything crashed and I didn’t get my money back.

Sorry about that. How much was your “investment” in MMM?

I can’t remember, to be honest, but I know it was more than my allawee. In fact, I borrowed money from a girl I was seeing then because, by that time in 2017 when the focus was on bitcoin, I was sure I would get my money back. But I ended up having to pay a debt for the rest of my service year.

It seems your introduction to bitcoin was not a pleasant one.

At first, it wasn’t but I really didn’t blame it on bitcoin. I didn’t lose my money because bitcoin failed. People who used local currencies like naira still lost their money at the end of the day. So, I just counted it as bad luck because I thought if I had joined sooner, I could have made money from it before it crashed.

What was your first good experience with bitcoin?

That came after I got back from NYSC. A friend told me about a trading platform where I could trade crypto and make money. He was a bitcoin merchant so I could buy bitcoin into my Blockchain wallet directly from him. Which I liked because his rate compared to other platforms available then, was better. So I started playing around on this platform, Poloniex in April 2017. And it was nice even though I didn’t really know what I was doing but I knew numbers and when it went up I sold.

Did you make a lot from trading?

Not a lot, but that was mainly because I only used small amounts to trade. Even though the worth then in fiat was small, today it’s really a lot of money and a part of me wishes I had just left those coins in my wallet. But I also know that I couldn’t have done that because I didn’t have a lot of money then, so I couldn’t afford to not spend the one I had. Sapa has been real siiiince.

Have you continued using bitcoin since then?

No, I stopped using bitcoin and crypto for a couple of years after my biggest heartbreak.

What happened?

It was in June 2017. A few months after I got back from service, I got a job interview in a very cool company but I didn’t have any presentable shirt or trousers to wear so I decided to sell some of my BTC (about #10k worth) to buy what I needed. I reached out to my crypto merchant friend but he wasn’t buying at that moment. Then someone referred me to Paxful, that I could sell to others there and get my money. So I registered and transferred from my Blockchain wallet to Paxful, I found a buyer with a rate that was very high. I know that should have been a red flag but I needed money and all I could think of was that I was making 3 times my money’s worth from this sale. This guy marked the trade as done on his end and told me he had sent the money. I told him I was waiting for bank confirmation and he said okay but he could also show me a screenshot of the transfer. So I said okay. He sent a screenshot from the GT Bank mobile app, showing that he transferred money to my account. I didn’t know then that they doctored screenshots as well so I agreed when he said it was just bank delay, knowing that with Nigerian banks that was a valid point.

Wow, that’s wild! When did you realise you’d been scammed?

When I didn’t get a credit alert 7 hours later. I reached out to him and he didn’t reply. So I gave him a negative rating. And this guy went ahead to give me a negative rating as well, like what?! You just stole from me, man! In fact, I have a screenshot because that man had some nerve.

That was crazy. Were you able to attend your interview?

Yes, I did. I wore my brother’s bigger clothes. I knew before I left there that I wasn’t going to get the job because of my performance. This made me sadder. That was when I decided to forget about bitcoin.

That’s really sad. How come you got back into the crypto space?

After I got scammed in 2017, I stayed away till 2020 when bitcoin became a bit more mainstream. I stayed curious and kept up with news about crypto. But I just didn’t trust any trading platform or even buy from anyone again. But in 2020, a friend told me about Yellow Card and how their model was different, that I would be buying from the company directly at very good rates, so I decided to open an account. That was in July or August 2020. But I didn’t start buying bitcoin again till October after I had done my research about Yellow Card and saw that they are legit.

How has your experience been since you joined?

Honestly, it’s been great. Because now I know much more about cryptocurrencies, what to expect and what the red flags are.

So you think a lack of education about cryptocurrency contributed to your mishaps?

Sapa and greed played their roles but, yes, I think the lack of education was the main thing. If I had known what to expect from crypto and what exactly it was trying to solve I would have been more careful. For instance, now I know that bitcoin is not a get rich quick scheme and when any rate or deal sounds too good to be true, then it is very likely not true. And I’m happy YC takes crypto education seriously with the YC Academy, we really need more people to be educated.

What would you consider your biggest win in crypto?

The bitcoin run of 2020/2021. When I got back into crypto in October 2020, I began buying a specific amount every month. That was October to December. And when the bitcoin boom started in December 2020, it was like compensation for my previous experiences. It made me happy and encouraged me to keep using bitcoin. Then as I started learning more about bitcoin, I learned more about other cryptocurrencies as well. Now I can do some trading and make some money by the side, it’s been interesting since then.

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