Investing in Cryptocurrencies,
Exchanges and Security.
Hello, again crypto friends and welcome to Blog number 2.
To recap on the last blog, we spoke about Satoshi Nakamoto's white paper, what are blockchains, and the case for Bitcoin for the real world.
So, today I wanted to talk about investing in cryptocurrencies, exchanges, and the very important topic of security regarding your coins.
From my first blog, you should now have a basic grasp of what a cryptocurrency is and how it uses a Blockchain to move from computer A to computer B. For those of you who have made the extra effort to learn even more about this fast-moving technology well done to you all.
With that said you all now feel ready to invest your hard-earned fiat currencies in cryptocurrencies and make amazing returns on your investments. Not so fast, it must be noted that as of the year 2021 there are currently 4,000 different cryptocurrencies available to choose from (that's right Bitcoin is not the only cryptocurrency available to investors). So, which one should I invest in I hear you all cry? Well, that is completely up to you. As with any sort of investment, there is always a certain element of risk and cryptocurrencies are no exception to this fact.
In this new world of crypto, you're going to hear the term "DYOR" (Do your own research) quite a lot. Never at any point within my blogs am I going to say to my readers that you should invest your fiat currency into a certain cryptocurrency because to put it simply I cannot predict the future. If I knew that a certain cryptocurrency is about to increase in value by 200% and there is absolutely no risk to your investment then obviously would invest every cent that I had into that coin then retire on a beach in the Bahamas sipping cocktails for the rest of my life, unfortunately, I cannot. I can however advise you on ways to minimize your risk thus helping you choose that killer coin that is going to reap those big rewards. One of the ways to do that is to "DYOR". Below are some basic concepts that you should be looking for before investing.
Who is leading the project and what is their credential background?
For example, I consider myself as a very conservative investor therefore I would be very cautious of a newly launched cryptocurrency being led by a CEO who has no experience in the industry and does not hold any prior credentials. To state the obvious if a CEO does not know what they are doing then there is not much hope for the rest of the project. In today's world, a person can easily be researched on their employment background using online tools such as LinkedIn or a simple google search. Finding out who the CEO is and how respected they are within the crypto industry is a priority before any investment is made to minimize your risk.
Example 1:
Vitalik Buterin is the CEO of Ethereum which is the 2nd biggest cryptocurrency by cap market value, in 2014 he was awarded the Thiel Fellowship, and in 2018 and he was awarded an Honorary Doctorate by the University of Basel. He is well established and recognized within the cryptocurrency industry and Ethereum has a clear goal of its future focus.
Example 2:
Charles Hoskinson is the CEO of Cardano, is a mathematician and co-founder of Ethereum. In 2014 he left Ethereum for personal reasons and started Cardano. He holds university degrees from the Metropolitan State University of Denver and the University of Colorado Boulder.
What does the project aim to achieve?
Understand that the cryptocurrency is backed up by the project that the company is running. For example, ETH is the name of the cryptocurrency coin itself (it is the currency of the Ethereum Blockchain). Ethereum is the name of the project, it is a community-run open-source blockchain that aims to run thousands of decentralized applications run by 3rd parties.
When was the cryptocurrency launched and how long has it been in circulation?
Bitcoin was launched in 2009 and is still active to this present day, it still sits at number 1 on the cap market value leader board and is well established worldwide. I would personally give any new cryptocurrencies several months to settle in before investing in the project. That way it gives the community time to understand the new coin and if the worst-case scenario occurs and the coins turn out to be a scam then this should be identified early. Remember that If the project is backup by absolutely nothing then the chances are high that the price of their cryptocurrency will do just that, absolutely nothing.
Where does a person buy cryptocurrencies from?
So, congratulations on getting this far, you have completed your "DYOR" and you have found the cryptocurrency coin that you wish to invest into. The next step is where do you buy the coin from? A person buys their cryptocurrencies from an online exchange which is a website where a person can buy/sell all types of cryptocurrencies.
It must be noted that there are also over 200 different exchanges operating around the world. So, which one do you choose from? I use the Binance exchange because at the time of writing it was the biggest exchange in the world and uses some of the best cybersecurity which even some banks would envy so I have been told. Their user interface can be a bit tricky to master especially for a beginner but there are plenty of YouTube tutorials to help you navigate your way through.
So, once you buy your crypto what do you do with it now? That again is your own decision to make. You can choose to Hodl (Hold On for Dear Life) in the hope that years later your coins are worth a small fortune. Or you could choose to become a trader, for those of you just starting into the crypto world I do not recommend trading until you have a solid understanding of the industry as this is something that can take many years to master.
Security and Scammers:
At this point, you all need to pay attention. Market crashes happen all the time throughout the crypto cycle and it would be very bad if your investments lost 80% of their value due to a crash, on the bright side you would still own the coins and there is a chance that the value of those coins could go back up in the future one day so that you could recover your investments. But what would be terrible would be if your coins got stolen effectively taking wiping out 100% of your investment and the chances of you ever recovering your investments is next to zero.
Unfortunately, where there is money to be made it will attract scammers and I am personally getting quite concerned with the never-ending scammers that pratol social media websites such as Facebook and WhatsApp looking to pray on their next victim. I'm hearing horror stories of people losing huge amounts of money and sometimes their entire life savings through these scams. Last year alone Australians reported a record-breaking $37 million lost to digital scammers and that is just the reported figure. I have no doubt that you have all worked hard to save money for your investments and you all want to enjoy a good retirement, you should not be losing your money to digital scammers. If you use social media websites then the chances are very high that you will in the future be contacted by a digital scammer, so please listen next. If you are new to cryptocurrency then you are at high risk of being scammed. Scammers deliberately target new people in the crypto space because they know that these people are the most vulnerable.
What is a digital scammer?
It is a person who wants to steal from you by tricking you into handing over your money or your personal information fraudulently and dishonestly. So, you're probably thinking that that's never going to happen to me, well you will be very surprised when you realize that some of the smartest people can also fall victim to these scams. Digital scamming is big business and is well organized right up to the state level, yes, the country of Nigeria I'm looking at you! The internet has truly changed the world that we live in, we can connect to anyone in the world however it has also allowed the digital scammer to connect with us and the more digitalized our personal lives become the more open we are to a scammer attack. A person just has to look through their spam email box and I guarantee that there will be an email in there from the FBI or the Prince of Saudi Arabia who has found $10 million which they just so happen wish to share with you.
Here are some very basic rules to keep yourself safe:
Rule number 1: If it sounds too good to be true then it probably is. In other words, if a person contacts you claiming to be able to mine you 10 bitcoin per day which is equal to USD 10,000 every day for the rest of your life and there is absolutely no risk then I would say that it's highly likely a scam, simply block them on the medial platform and report them.
Rule number 2: Trust no one online who you have never met in person before. It is all too simple for anyone to set up a fake Facebook account and then start calling themselves Doctor Bob who is head of the US Federal Reserve. A scammer will contact you will their typical statements of wanting to help you make millions of dollars. Ask yourself this question, why would they be wanting to help you become a millionaire, and what is in it for them? Look at their spelling and grammar, I would expect a person who claims to be from an English-speaking country not to have any spelling mistakes in their sentences and have good knowledge of their own countries geographics.
Rule number 3: As stated above always do your own research on a cryptocurrency before you invest, read through its white paper, and understand what the project is trying to achieve. But remember that no one really knows what the market is going to do. If a person claims that a certain coin is going to be worth a small fortune in the future approach it with caution.
What is a phishing scam?
A phishing scam is another form of scam but this one is email or tx messaged based (Think fishing = Phishing). For those of you who think that your safe because you don't use any form of social media think again, you are still vulnerable to attack. It is basically a fake email or tx message that is a near replica of the real thing such as a banking email, cryptocurrency wallet, or government website. As with making a fake Facebook account, it is again all too easy for a person with good computer skills to copy a legitimate webpage and then design a fake email from that webpage. These phishing scams will be asking you to input your personal details, banking details, or crypto details. Since these phishing scams can closely resemble the real thing it can be sometimes very difficult to spot them apart however are a few red flags to look for:
Do not click on any links or open attachments from emails that have come from an unknown address.
Google search the names of the companies within the email, have other people heard of this company before and what does it do?
Have you been contacted out of the blue and is the email threatening you?
Unfortunately, already a lot of our personal information is freely available to scammers who use the dark web. The best security is yourself, be vigilant and stay up to date with the latest scamming attacks.
Below is a basic example of a "phishing" email or tx message that you could receive in the future:
https://SupportZryptocurrencyInvestment.com
Dear Client,
!WARNING!
Your account has been hacked! In order for us to maintain the safety of your cryptocurrency and your personal information, you must open the link below immediately.
Failure to do this will result in your cryptocurrency being stolen! And there is no way to get it back!
You must provide your personal details to us now or else!
• Your Name:
• Date of birth:
• Address:
• Your password:
Yours sincerely from the CEO.
236 Greens Street, New York City, USA.
There are so many red flags that stand out within this email
Look at the URL, there is a clear spelling mistake of the word "Cryptocurrency" spelt with a “Z”??
A CEO of a large company is hardly going to have the spare time to contact you personally.
This email is obviously generic because it is not addressed to you personally and is not using your full name.
The company is asking for personal data which it should already have access to if you are one of their clients.
The email is not written professionally.
No company is ever going to threaten you into handing over your personal data and certainly is never going to ask for your password.
Research the physical address at the bottom on Google Maps, does that address really match up to the location of the company that it says that it is?
When it comes to investing in cryptocurrencies remember that your family, your health, and your house whole bills always take priority over cryptocurrency investing. You only ever invest what you can afford to lose, you would never go to your nearest casino and bet your entire life savings on "Black". Be responsible with your finances, stay safe out there, and help the new people who are coming into the crypto world.
Rob 😊