Tag: crypto exchange

  • How Yellow Pay is Unlocking New Opportunities for Africans using Crypto-Powered Payments Solution

    How Yellow Pay is Unlocking New Opportunities for Africans using Crypto-Powered Payments Solution

    Despite the shared cultural and socioeconomic similarities among various African countries, their proximity, and coexistence, the continent is starkly divided by a fragmented payment infrastructure.

    This division has made it exceedingly difficult for small business owners and everyday individuals to smoothly exchange value and receive payments across the continent. For instance, a small business owner in the bustling city of Lagos encounters payment challenges when providing services to customers in the welcoming city of Accra.

    Similarly, people in the lively cities of Johannesburg face hurdles when trying to send payments to business partners, friends, and family in Kigali or Nairobi, all due to the disjointed payment system.

    Even when payment solutions are found, the associated fees often discourage repeated transactions.

    Africa possesses immense potential for economic growth and development, but it grapples with significant obstacles in enabling trade and financial inclusion.

    The absence of efficient and cost-effective cross-border payment systems is constantly impeding the flow of goods, services, and capital throughout the continent.

    Each country operates with its distinct payment system and currency, leaving little room for integration with the broader African community.

    This situation gives the impression that African countries and their citizens are isolated in economic islands, stifling potential growth opportunities.

    According to a McKinsey report, only 5 to 7 percent of all payment transactions in Africa are conducted electronically or digitally, in stark contrast to more than 50 percent in Turkey.

    This means that a significant portion of cross-border payments still relies on cash or informal channels, which are costly, slow, risky, and often inaccessible to many segments of the population.

    However, the situation is rapidly evolving as Africa embraces innovation and technology to reshape its payment landscape.

    The same report notes that in 2020, Africa’s e-payments industry generated approximately $24 billion in revenue, with around $15 billion stemming from domestic electronic payments.

    The domestic e-payments market is projected to grow by approximately 20 percent annually, reaching about $40 billion by 2025.

    With this understanding, Yellow Card introduced a new product at the end of 2022, Yellow Pay, offering a seamless and secure means to send and receive money across African borders instantly using cryptocurrencies. Initially available in a few countries, by January it had gained traction and is currently accessible in 16 African countries, including Nigeria, Botswana, Zambia, South Africa, Cameroon, and Kenya.

    This product eliminates the complexities of currency conversion and hidden fees when making payments to loved ones in other African nations.

    With a few clicks, customers can smoothly convert their local currency into crypto and send it to recipients in a different country, who will instantly receive it converted into their local currency.

    “This is more than just a money transfer service – it’s a powerful tool that will unlock new opportunities for people across Africa,” said Chris Maurice, CEO and co-founder of Yellow Card.

    “By enabling instant, low-cost transactions across borders, we are helping to create a more connected and dynamic Africa.”

    Yellow Pay
    Yellow Pay agents

    Yellow Pay leverages Yellow Card’s crypto exchange platform to complete customer transactions using USDT on the blockchain.

    As mentioned in the McKinsey report, cryptocurrencies, stablecoins, and central bank digital currencies (CBDCs) are expected to have a significant impact on the outlook for e-payments in Africa, given their promising use cases and Africa’s historical propensity to embrace innovation on a large scale and leapfrog into the future.

    Peter Mureu, the Director of Marketing at Yellow Card, highlighted the product’s unique value proposition, emphasizing its affordability and speed as game-changers.

    The product holds the promise of bridging the payment divide within Africa, enabling Emeka to easily connect with Kwame for service exchange and Mhambi to establish stronger business partnerships with Nadia through this seamless payment solution.

    The significance and relevance of cross-border payments in Africa cannot be overstated. These payments facilitate international trade, stimulating economic growth, job creation, poverty reduction, and regional integration.

    They also play a pivotal role in promoting financial inclusion, enabling individuals and businesses to access financial services, save money, invest in opportunities, and enhance their livelihoods.

    As Africa continues to innovate and adopt new technologies to enhance its payment systems, it is poised to become a global leader in e-payments and a model for other regions to emulate.

    The future of payments in Africa shines brightly with promise.

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  • If an Exchange is Hacked, You Lose All Your Crypto

    If an Exchange is Hacked, You Lose All Your Crypto

    Over the years, crypto exchange hacks have occurred occasionally, with user funds getting stolen in the process. Whether users recover their assets in the aftermath of such events depends on the exact case and circumstances.

    In the unlikely event of a significant hack, responsible exchanges can safeguard user funds with measures like using cold storage and putting up robust security systems. Some go even further, protecting their customers’ assets via insurance funds or other mechanisms that are deployed in exceptional circumstances.

    Secure your Crypto Funds - Image by DataDrivenInvestor
    Bitcoin – Image by DataDrivenInvestor

    Binance’s SAFU fund contains $1 billion worth of crypto assets set aside to compensate users in the case of extreme events such as a security breach.

    With blockchain still being a relatively new technology, many falsehoods and misconceptions exist around crypto. Today, we will look at what happens if a crypto exchange is hacked and why it doesn’t always mean your funds are lost for good.

    Many believe that once a crypto exchange holding one’s assets is hacked, there’s no way to get back the money. With millions of people regularly using centralised exchanges, today’s myth is one of the biggest we’ve taken on so far. If you’ve ever taken this misconception at face value – it’s time for a debunking.

    What Happens if a Crypto Exchange Is Hacked?

    Crypto exchanges are online platforms that allow users to trade digital assets. While such exchanges, centralised and decentralised, provide convenient access to the world of digital finance, they can be vulnerable to hacking. Today, successful attacks on big exchanges are extremely rare. However, if an exploit does occur, the consequences for users can range from minor inconvenience to catastrophic loss of funds.

    In severe cases, criminals may gain access to the wallets that hold users’ funds and syphon off large amounts of cryptocurrency. Due to the nature of blockchain, these actions will be irreversible. Additionally, the hacker may be able to access sensitive user information such as email addresses, passwords, and identification documents. These can be used for further attacks, such as phishing or identity theft.

    The possibility of such hacks, however, is not unique to crypto platforms: banks and other traditional financial institutions are as likely to become targets of criminals looking to compromise their internal systems to steal money.

    Responsible crypto exchanges have layers of security measures and policies in place to ensure that hacks don’t happen. Yet, even in the highly unlikely event that nefarious actors manage to steal digital funds from an exchange, it is still far from game over.

    Although security breaches do happen on a central level, attackers are more likely to obtain unauthorised access through fraud: targeting individual users with highly sophisticated social engineering tactics to get them to disclose their login credentials and bypass two-factor authentication methods.

    Following the Stolen Funds

    What happens in the case of a successful hack largely depends on the actions of law enforcement. Generally, the larger the scale of a hack, the more likely investigators are to invest significant resources in tracking down the perpetrators.

    Thanks to the transparency of records on public blockchains, the stolen funds can be traced quite easily, making it difficult for the hacker to get away with the spoils. If the authorities find a way to link the wallets through which the funds move to the identities of hackers or their accomplices, the criminals are in trouble. Once they are arrested, law enforcement will most likely be able to seize at least some of the stolen money and use it to compensate the victims.

    For example, in 2016, the Bitfinex exchange was hacked, resulting in the loss of approximately $72 million worth of bitcoin at the time. U.S. government agencies were able to recover the majority of funds and return them to users.

    The victims of a 2014 hack of the exchange Mt. Gox were less lucky. Some $460 million worth of bitcoin was lost, and the exchange was unable to recover much of the money, leaving users with significant losses. Repayments began in 2023 with some recovered funds, but much is still missing.

    As you can see, even the assets lost in major heists can be eventually recovered. However, it is an arduous, lengthy process, and no one can guarantee the desired outcome. Luckily, there are also things that the exchanges themselves can do to protect users in the event of a security breach.

    What Can Exchanges Do?

    Crypto exchanges constantly face threats from hackers and other malicious actors seeking to steal user funds. Exchange platforms implement various security measures to safeguard the funds that customers entrust to them. One good practice is to utilise cold storage, keeping user funds offline in hardware wallets. Careful consideration of the risks and benefits is needed to maintain the proper levels of liquidity for exchange operations to continue smoothly while minimising any potential, even if unlikely, risks to user funds.

    Multi-factor authentication and password policies are among other common security features used to prevent unauthorised access to user accounts. Many exchanges also have a cap on withdrawal amounts, with additional checks required to go beyond the limit. User education is also key to avoiding falling victim to scammers.

    Furthermore, some exchanges have proactively established insurance funds to provide additional protection to their users. One prominent example is Binance’s Secure Asset Fund for Users (SAFU), funded by a portion of trading fees, which covers losses incurred by users as a result of extreme situations such as hacks. Some other exchanges have also established similar funds or insurance policies to provide an additional layer of protection for their customers.

    Final Thoughts

    Crypto exchanges employ a variety of policies and security measures to safeguard users’ funds and data from potential hacks. Exchange insurance funds are an excellent tool for providing extra peace of mind for users. After all, even the most advanced security systems are not infallible, and there always remains a possibility of a hack.

    We have previously called on all centralised exchanges to introduce similar measures. Self-insurance benefits the entire ecosystem and demonstrates our collective commitment to raising the bar on upholding trust, integrity, and transparency in the crypto industry.

    Fact:  Responsible exchanges constantly improve their security systems and build safety nets for their users, ensuring robust protection of customer funds in the face of potential hacks.

    Disclaimer and Risk Warning: This content is presented to you on an “as is” basis for general information and educational purposes only, without representation or warranty of any kind. It should not be construed as financial advice, nor is it intended to recommend the purchase of any specific product or service. Digital asset prices can be volatile. The value of your investment may go down or up and you may not get back the amount invested. You are solely responsible for your investment decisions.

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