Yesterday, May 21st 2019, the British FCA released a statement containing figures related to currency and ‘crypto asset’ scams.
It states the total amount of money lost through said scams tops £27 million and represents an average loss of over £14,000 per person affected.
The report highlights online trading platforms which have a “get rich quick” theme as the main culprit. It also states that said schemes often use fake celebrity endorsements to legitimise their brand in the eyes of consumers.
“Fraudsters often use social media to promote their ‘get rich quick’ online trading platforms. Posts often use fake celebrity endorsements and images of luxury items like expensive watches and cars. These then link to professional-looking websites where consumers are persuaded to invest.”
It goes on to state when people invest they’ll tricked into thinking they have “made a profit” then be convinced to reinvest and/or introduce friends/family.
Eventually the victim’s account on the platform is closed and the scammer moves on.
Some Safety Advice
However, if you don’t know your hot wallet from your hot pocket this is for you.
- Rule #1: Never Share Your Keys!
The first rule of crypto is a very simple one but it is the most important. Do not share your private key with anyone.
Your private key is your metaphorical key to your existence in the crypto-verse. No legitimate website will ever ask for your private key as a result of this.
A solid rule to go by is this: if a site asks for your private key it is not a site you want to be visiting. The only people you should ever share your key with, are people you would give access to your bank account.
- Rule #2: Invest What You’re Comfortable Losing
Although this rule might well be a cliche, it is an important one. Never invest more money than you are able to lose. If your investment is using money which you need for the rent, pay the rent.
The volatile nature of the cryptocurrency industry means even legitimate projects have a high chance of losing you money. While the industry is still finding its feet it is hard to accurately predict what tomorrow’s price will be.
If you look at the bitcoin charts you will see that the price can change hundreds of dollars in a matter of hours. This type of swing has the ability to cripple new investors.
This brings me to my next point…
- Rule #3: No One Can Guarantee a Profit
If a project is guaranteeing that you will earn a profit, avoid it. It is more than likely a scam and will take your money.
We have all had bad experiences in the crypto-space and let our greed cloud the judgement of our mind. It’s a hard lesson to learn but an important one.
You’ve heard the saying about things which are too good to be true. Well, the same rule applies here. If something is guaranteeing you a profit on your investment run for the hills.
- Rule #4: Do Your Own Research
Again, a pretty basic rule but important none-the-less. People take random internet personalities all too seriously in all walks of life. Don’t do the same with your investments.
Just because Bob, the famous internet blogger with a million fans, says something is a good project to invest in doesn’t mean it is.
A lot of the time famous internet bloggers/vloggers are being paid to push a product. Again, crypto is no different.
On top of this you also need to factor in the possibility of the online personality trying to get a bit of attention to a coin they wish to dump.
- Rule #5: If You’re on the Ropes, Bail
This is a rule I try to employ in all walks of life. If you are not 100% sure in the prospect of investing in a project, don’t.
As humans, when we are on the metaphorical ropes about something we tend to make brash decisions which we may regret. This is why I would advise to always lean on the side of caution when you are unsure.
Better safe than sorry.
Love, peace and happiness.