Cryptocurrency has brought a lot of wealth to a lot of people.
These digital currencies have been around for a few years and include currencies or coins like Bitcoin, Ethereum, Bitcoin Cash, XRP, Dogecoin, and other altcoins.
Cryptocurrencies aren’t real coins but digital coins existing online only.
You can buy and sell cryptocurrencies using cryptocurrency exchanges. You can also “mine” cryptocurrency using high-powered computers or equipment.
Recently there was a big spike in interest in cryptocurrency, raising their prices. Bitcoin, the main and most popular cryptocurrency, went from $10,000 per coin to more than $50,000 per coin in just a few months. (For comparison, it was trading at less than $1000 per Bitcoin in 2017 and just a few cents in 2010.)
People who bought digital currencies early saw their wealth rise phenomenally when the prices of cryptocurrencies rose. With the increase in Bitcoin millionaires came an increased interest in digital currencies. However, so did the opportunity for fraudsters to scam and steal from uninformed people.
Some started MLMs or fake coins and sold them as real coins. See 7 Most Common Cryptocurrency Frauds. MLM is multilevel marketing or ponzi schemes where newer people’s “investments” are used to pay “profits” to older members.
Some people used various methods to steal cryptocurrencies from ordinary people by using scams such as promising to increase a person’s cryptocurrency but in fact stealing their cryptocurrency from them. Or promising to buy bitcoin from someone for a higher rate but never paying the seller once the bitcoin is transferred. (So if anyone tells you to send them your bitcoin / cryptocurrency wallet key, don’t trust them just as you wouldn’t give your credit card number online.)
And this month, one Turkish cryptocurrency exchange (Thodex) founder and CEO allegedly closed the exchange trading and ran away with $2 billion in people’s money.
These won’t be the last of such scams / frauds.
As more and more people put their money into cryptocurrency, the risks of fraudulent organizations and people increase.
For this reason, you need to be informed and beware of the dangers.
Here are a few precautions to keep yourself safe:
- Research the platform and currency well before you invest.
- Use regulated exchanges.
- Take informed risks and not blind risks.
- Only invest what you can risk to lose.
- Consider transferring your cryptocurrency from the exchange to your own wallet instead of leaving it in the exchange. See What’s the Difference Between a Bitcoin Wallet and an Exchange?
- Diversify: Invest in different types of investments like bitcoin, altcoins, gold and silver, land / real estate property, stock, etc.
- Have cash / savings for a year’s worth of expenses.
***Disclaimer: For informational purpose only. Not meant to be investment advice.