Recently, a story about an elderly woman getting scammed online caught our attention. She didn’t have any knowledge concerning cryptocurrency and was therefore vulnerable to crypto fraud.She simply wanted to secure her savings and help out her grandchildren by investing in bitcoins; unfortunately, she lost her money. Since this is not an isolated incident, we wanted to write this article to introduce you to the topic of cryptocurrency and explain the dangers that come with it. Cryptocurrencies have been quickly growing in popularity and while it can be tempting to boost your income by investing in them, it is also extremely important to stay alert and vigilant before making a commitment. We are here to show you how not to fall victim to cryptocurrency fraud online. As a rule of thumb, always be cautious of unexpected emails, phone calls, and letters concerning largesums of money.
First thing’s first, what exactly is cryptocurrency?Cryptocurrency (or crypto for short) is a type of digital currency that only exists electronically and can be used for selected goods and services. It was designed to be a secure method of payment through the use of cryptography – a process that converts information into a difficult to crack code. What makes cryptocurrency valuable is that, in contrast to pound sterling (or other currencies), it has a finite supply. Unfortunately, the rise of cryptocurrencies also attracted fraudsters and con men who count on the naivety of the public in order to steal an investors’ money. They might offer unrealistically high return rates, provide falsified reports, nag you to invite more users, or ask for your private details such as passwords and bank account information.
BitcoinChances are that you’ve heard of Bitcoin before when somebody brought up the subject of cryptocurrencies. Bitcoin was the first cryptocurrency, created in 2008 by an unknown person (or group of people) using the name Satoshi Nakamoto. Even today it is still the most popular cryptocurrency used and its price movements influence the rest of the crypto market.
What practices to avoidWhilst using the internet you might have noticed a sea of comments that invite you to check out an investment opportunity that seems too good to be true, followed by a link that supposedly takes you to the cryptocurrency’s website. Do not click on links of this nature as they might download malware onto your computer or lure you in to provide sensitive information. Scams are very common so don’t respond to any cold calls or emails.
How to buy it safelyWhat you can do instead is to make sure that you are well prepared before you start investing – by gaining as much knowledge about cryptocurrency’s fundamentals as you can. The first step is to ensure that you are using a secure internet connection. After that you should decide on an exchange (or a broker) where you will buy and sell cryptocurrencies. It is also worthwhile to look into the background of these brokers to make sure they are legitimate. Here are some examples of well- known exchanges you might want to consider and their main characteristics:
- Easy to use interface
- High liquidity
- No control over wallet keys
- High fees when using the basic version
- Lower fees in comparison with other exchanges
- Large variety of cryptocurrencies
- Not the easiest one to use for beginners
- Anonymous trading
- Large variety of cryptocurrencies
- Low trading volume
- No minimum investment amounts
- Users have been locked out of their accounts in the past
- Low fees
- Users can buy & sell fiat and crypto currencies with credit/debit card and cryptocurrency
- Deposit crypto, earn interest
- Spend with the Crypto.com Visa Card and get up to 8% back. Top-up with fiat or crypto
- Grow your portfolio by earning up to 14% interest on your crypto assets
- Low privacy
- Big interest on savings accounts
- Advanced security features
- Not possible to buy/sell cryptocurrencies directly through its platform
- Earn daily interest on your crypto and EUR, GBP and USD. Up to 12% annual interest
- Borrow Cash or Stablecoins. Interest starting from 5.9% APR. Automatic approval, no credit checks
- Get instant cashback on all purchases and take advantage of flexible repayment options
- Easy to use app
- Multiple cryptocurrencies
- Advanced security features
- Transaction fees can be high for some coins
TrezorDiscover the secure vault for your digital assets. Store bitcoins, litecoins, passwords, logins, and keys without worries.
- Advanced security
- Variety of cryptocurrencies
- Regularly updated
- More expensive
How to protect yourself from scamsThe short answer is – research is key. Don’t buy bitcoins off an advert, do supplementary reading online and look for any mention of the service that you’re interested in on trusted websites (such as Forbes or the Financial Times). You can also familiarise yourself with ‘How to’ beginner guides that will point you in the right direction. Additionally, keep yourself updated with the current messages and warnings released by the UK’s Financial Conduct Authority.
How to saveThe best way to embark on your cryptocurrency journey is to start slow. Establish how much money you are willing to invest, don’t go over your assigned budget, and come up with a strategy that is unique to your personal risk tolerance. In the beginning, you can purchase small fractions of cryptocurrency and observe when its value increases and decreases (some services allow you to set alerts to warn you when the value has dropped below/above a specific point). However, there are always risks associated with any kind of investment and it’s important to bear that in mind.
Now, let’s sum it up in some pros and cons…
- Crypto is a decentralised currency giving you a lot of power to control your own finances
- It is not attached to a specific financial organisation that exercises control over the currency meaning it is a flexible currency option
- It gives you anonymity – you don’t have to give out your personal information when starting a crypto wallet (in fact it is better to avoid sharing your phone number for instance, as your name and a number is all it takes for a criminal to steal from your Bitcoin wallet)
- The number of coins issued is limited therefore their value is very likely to increase
- More and more business are accepting cryptocurrency as a form of payment
- It has big potential loss and limited security options
- Transactions are irreversible, once the money leaves your account it is impossible to get it back even if the transfer was a mistake
- Despite cryptocurrency’s finite number, its value can be volatile, unpredictable, and can drop abruptly
- Cryptocurrency investors are frequently targeted by criminals, so you need to take advantage of all the safety measures available to you
DisclaimerThe information provided on this website does not constitute investment advice, financial advice, trading advice, or any other sort of advice and you should not treat any of the website’s content as such. Won Connect CIC does not recommend that any cryptocurrency should be bought, sold, or held by you. Do conduct your own due diligence and consult your financial advisor before making any investment decisions.
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