Ways to do your dough on crypto investing
The advice to investors in Bitcoin or other cryptocurrency is be aware of the risks and plan accordingly. A prudent investor is not going to invest their entire life savings into crypto, something a fool may do and this is not just because of the volatility of cryptocurrencies. There is more than one way of your money disappearing with crypto.
Here they are:
1 Volatility
This is the most common way to lose your money. We all know about the volatility of cryptocurrencies. We also know that it is possible for the value of your Bitcoin to drop significantly. It is because of this that you should only use discretionary spending money for purchasing cryptocurrency.
What is discretionary spending money?
This is money you have left over after paying for your living costs.
2 Password amnesia
Losing your password is another way you can lose your money in bitcoin. Crypto wallets tend to allow you to have a number of failed log in attempts before you are locked out of your wallet permanently. This happened to an Australian man who had 400k in his crypto wallet. He had tried everything he could to remember his password. After 8 failed log in attempts he was left with two. No news on whether he had used up his last two attempts.
3 Hacking
Hacking can be a problem for websites and its users. Your email address can be hacked and if that happens your crypto will be exposed. It will pay to have a two step authentication system. That is you log in as normal with your email address and password. You are then sent a text and asked to type in the code which you received by text message.
4 Fraud or other circumstances
2022 saw the collapse of crypto exchanges FTX. The man behind FTX was arrested on suspicion of fraud. Blockfi also ran into difficulties but it is not known what its circumstances were.
Bitcoin is not a substitute for your retirement fund. It needs to be treated separately and only with money you can fully afford to lose.
There are over 100 crypto exchanges and it is likely that others will suffer the same fate as FTX and Blockfi for various reasons.
Scam warning
Here is a warning which you should take note of. I know someone who deposited $3,000 into his bank account and the following day the money just simply vanished from his account. He alerted his bank. They found that his personal bank account was linked to his debit card which he gave to an overseas website to purchase goods. However, this site was hacked which provided those responsible with easy access to his money. I told him that he should have deposited the money into an account which is not linked to internet banking.
There was a happy ending as the bank paid him $3,000 for his loss.
ABOUT THIS ARTICLE
This article is of the opinion of the writer and may not be applicable to your personal circumstances. Feel free to share this article. You may use it as content for your blog/site or ebook.
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www.robertastewart.com
