Digital currencies like Bitcoin, Ethereum, and Litecoin are hot right now. But they’re also risky, with tales of hacked exchanges and virtual wallets commonplace. In fact, the risk is so high that many established financial advisors won’t even venture an opinion on them. If you’ve been thinking about dipping your toes into the world of crypto but haven’t quite figured out how to go about it, we’re here to help! This article will give you insider tips on how to trade safely and avoid scams when exploring the world of cryptocurrency. These are tried-and-true methods from our team of financial experts that will help protect you from fraudulent brokers, advisors, and websites looking to exploit people new to investing in digital assets.
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Be extremely careful with your information.
While the internet makes many things possible, it also makes it easier than ever to steal your information. Crypto investing has its fair share of hackers and scammers, who are looking to steal your data and money. Even when using a regulated broker, you’ll still want to take precautions when sharing your data. Most financial advisors don’t have access to your full Social Security number (SSN), but crypto investors often have to supply a full SSN for regulatory reasons.
Don’t deposit more than you can afford to lose.
As with any investment, you want to be sure that you can afford to lose the money you put into it. Contrary to popular belief, crypto investing is not a safe bet. Be sure to only invest what you can afford to lose. If something goes wrong, you don’t want to be left with nothing.
Use a regulated broker or exchange.
There are hundreds, if not thousands, of companies offering advice or services that facilitate crypto investment. If you use a regulated broker or exchange, your investment is insured, up to a certain amount. Although most scams involve individuals, there have been instances of exchanges going out of business, leaving investors penniless.
Take advantage of free research tools.
As with any investment, it’s important to do your due diligence. So how can you research cryptocurrencies without spending hours scouring the internet? There are a number of free research tools available to anyone, crypto investor or not. As an investor, it’s important to think of these tools as a way to start your research, not a way to be done with it. You want to read a wide range of information from different sources to get a holistic view of the crypto landscape.
Check out the reputation of the people running the show.
Ask yourself: Where’s the money going to come from?
While crypto investing may seem exciting, it’s also a source of income for many people. So where are the earnings coming from? What backs up your investments? Is it a tangible asset like gold or silver, or virtual coins that have yet to be adopted by a wide range of users? Not all cryptocurrencies are created equal, and some of them don’t have any real value. Do your research, and make sure your investment has a tangible backing.
Don’t forget to read the small print and check for red flags!
Finally, take a look at the small print and see if there are any red flags. Does the business have a physical address? Are they registered with any regulatory bodies? Do they have any complaints against them? Also, keep an eye on the company’s social media pages. Are they posting on a regular basis, engaging with their customers, and handling complaints appropriately? These are great ways to gauge the healthiness of the business and how seriously they take customer feedback. Cryptocurrency is a volatile, exciting, and often misunderstood investment. By following these insider tips on how to trade safely and avoid scams, you can make sure you’re trading in a safe, regulated environment and aren’t falling prey to scammers.