The scale of return on crypto investing over the medium to long-term has been phenomenal. Yet as an investment sector that is wholly unregulated, anyone investing in that arena is by definition taking a risk. When you look at the rate of return though – 133% in the last year – it’s a risk that many people are deciding is worth taking.
The next risk in an unregulated currency is avoiding scams and fraud. And there are lots of them about. In just six months to March 2020 US consumers lost $80 million to crypto scams. Alongside the scams there is a rumour mill that doesn’t always turn out to be correct, such as those about the Yuan Pay Group. Always make sure that you do thorough research. At the end of the day this is your risk and yours alone, so make sure that you take full responsibility for it and that you are fully informed.
So how can you invest in Crypto and stay safe and scam free? Here are our top tips.
1. Take your time to get set up
Always do your own research before taking out an investment. Never respond to an advert on Facebook or an endorsement from a celebrity. Take advice from a credible source, like this step-by-step guide to trading in bitcoin by PCworld magazine. Don’t try and cut corners and always remember the golden rule: if it looks too good to be true it probably is.
2. Test trade first
If you are new to crypto trading then it makes sense to begin with a demo account, where you can learn the ropes of investing before you take any real risks. Most platforms offer those demo accounts for this purpose. After that, you can start to test trade with a small amount of currency before you increase your level of investment. This will enable you to test the whole process and make sure that it is secure and legitimate before scaling up. Look out for any surprises like unexpected fees.
3. Treat any approaches with caution
Ignore cold calls, emails or texts. Always go to a source of information yourself rather than following links. Double check all links to see that they are legitimate. Scammers often clone sites and make very subtle changes to the website address, like adding a single letter or a hyphen. Don’t trust approaches even if they appear to be from credible or respectable sources, or well known business leaders or celebrities. Always stay informed by following reliable crypto news sources, and remember to check and double check everything.
4. Take security precautions
Crypto fraud can extend to your crypto wallet. This could be compromised by hackers or even by your close associates if they have access to your devices. Your crypto wallet is a valuable asset. Be very careful with your login information. Always use strong and robust passwords and store them in a secure password manager.
Never share your seed phrase or private key with another person. It is recommended that you store this information safely offline and that you use multi-factor authentication for online activities.
Crypto investment can offer phenomenal returns for patient investors. But it’s worth remembering that it can be highly volatile and it remains unregulated. Do your research, proceed with caution and never risk more than you can afford to lose.