New Zealand man caught in a bitcoin scam
Investing your hard earned savings requires commonsense but greed often interferes with a person’s sound judgement and this was evident when a Christchurch man lost his life savings of some 300 grand in what was described by police as a bitcoin scam as reported in the Christchurch press.
The number one rule of investing is to NEVER place all of your eggs in the one basket. Whatever possessed someone with this amount of money to do this? I mean you do not accumulate that amount of money without a certain degree of intelligence. It just goes to show that intelligence is not the same thing as wisdom.
The other rule that was broken was “NEVER purchase bitcoins with money you cannot afford to lose.” If you are going to play the cryptocurrency market then play it with discretionary money; this is money you may have otherwise spent on holidays and travel, or other things that are nice to have but not necessary and that really is a question of knowing the difference between needs and wants.
It appears that both rules were broken by this hapless investor who contacted police to warn others of his loss and pitfalls involving bitcoin.
The investor claimed that as he invested money in bitcoin, his wallet (a crypto currency term) grew larger and he invested more but when the value of his bitcoins shrunk due to the volatile nature of cryptocurrency, he invested more and more money. Someone from the website where he had invested his money kept phoning him and pressured him to invest more. The investor regrets having sent the bitcoin exchange his private details.
The lesson here is to NEVER feel pressured to invest money into any scheme-if you do, tell the other person, “I will speak to my financial advisor first.”
One common denomonator of scams is that they do not want you to discus the matter with anyone else so telling the other person you are going to talk to others about this will test them out.
Three things about bitcoin to keep in mind are;
1-They are highly volatile which means their value can move up and down very quickly. It is important this; “When there is the chance for capital growth-there is also the chance for capital loss,” and this applies to other investments such as the sharemarket, property, coins, or cryptocurrency.
2-Crypto currencies are not regulated in many countries and that includes New Zealand and therefore you have no protection if your investment turns to custard as a result of fraud.
3-Crypto Currency websites are being targeted by internet hackers who will attempt to steal from the wallets of others.
I have an ebook about investing in bitcoin which will help you understand the various aspects of this form of investment if you would like to call it that and you can order it here; 