Cryptocurrency is essentially a “buyer beware” investment
The new virtual currency is trendy but dangerous. If you’re not careful, you could fall victim to a variety of scams that lost investors worldwide about $14 billion in 2021, according to the blockchain data firm Chainalysis.
But let’s say you want to give it a try!
Until you’re an old hand at Crypto, a good rule of thumb is to keep it at less than 5 percent of your portfolio. Remember never to risk money on Crypto investing if you may need funds for emergencies.
One thing about Cryptocurrency is for certain: it has provided scammers with many new ways to commit fraud, without much chance of finding the perpetrators or recovering your money.
Here are a few things to beware of:
- Individuals or companies that deal exclusively in Crypto
- Anonymous or fake identities
- Games in which scammers may do a “rug pull” where they sell out and disappear
- Offers that promise 1000 percent return-on-investment
- Dating sites where one of the parties convinces the other to invest
- Typical phishing scams asking you to fill out forms with your personal information
Of course, some Crypto offers may be legitimate. But here are a few red flags you should know about just in case:
- Typos and misspelled words
- Contracts that obligate you to hold Crypto without selling
- Celebrity claims (check the return email or website for authenticity)
- Promises of free money
- Claims on social media that seem too good to be true
- Vague details on where your money is going
If you’re going to jump in, know when and how to use a Crypto Wallet.
As with any new technology, there are fortunes to be made.
Just remember that the Federal Trade Commission says about 7,000 people in the United States alone lost $80 million to Crypto scams from October 2020 to March 2021. If you’re anxious to give it a try, proceed with caution and know the risks.
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