Five Common Crypto Mistakes To Avoid

The latest research from UK regulator the Financial Conduct Authority showed that about 2.2m Brits own cryptocurrency in one form or another.

It’s very easy to get caught up in the hype of news headlines. Crypto mistakes are startlingly common, and below we list some of them.

1. Thinking crypto is ‘easy money’
   There’s nothing easy about making money through trading any kind of financial asset, whether stocks and shares or commodities like silver and gold. The same can be said for cryptocurrency.

Anyone who says different is probably trying to trick you into making crypto mistakes.

1. Falling for scams
   Be very wary of crypto deals that sound too good to be true. We outline four common crypto scams you could be careful of:

Cloud multiplier scams

Fraudsters sometimes contact victims by email or text with an “investment opportunity”. They promise to give investors double or triple the amount they have put into bitcoin if they send their cryptocurrency to a particular digital wallet.

1. Buying just because the price is low
   Low prices do not always represent bargains. Sometimes prices are low for a reason! Watch out for cryptocurrencies with falling user rates.

Often, too, developers leave a project and it stops getting properly updated, making the cryptocurrency insecure.

1. Forgetting your crypto key phrase
   If you have a hardware wallet for storing your crypto offline, forgetting your key phrase is like losing the keys to a bank vault.

Without your key phrase, all your cryptos will be irretrievable.

1. Going ‘all-in’
   Some of the more suspect trading platforms suggest you should maximize your money by betting as much as possible. This is a quick way to the poor house.

Better crypto investment tips would be to only use a certain proportion of your investing capital — say 5% — and always keep an emergency cash fund in an easy access savings account that never gets invested in the market.

REMEMBER: Offers of free money should always be viewed with great skepticism

Pump and dump

Criminals can easily inflate or deflate the price of very small or unknown cryptocurrencies, sometimes sending the value of these currencies skyrocketing.

Sometimes criminals will own a lot of a particular cryptocurrency (through pre-mining much of it before it is available to the general public).

When unwitting traders rush in to try and grab a piece of the action, the criminals wait for the price to increase before selling all their coins and causing the price to crash.

They can pump up the price by promoting it on social media, before selling it at the higher price.

Malicious wallet software

The best crypto tips will tell you to stick with big name crypto wallets, such as Ledger, Trezor, Exodus or MetaMask.

Dodgy or unknown wallets that you find on Google Play or the App Store can steal your crypto funds with dodgy code.

Fake coins

With so many cryptocurrencies on the market, it can be difficult to tell what’s real and what’s not.

When you invest in fake coins, criminals can steal your identity and often your hard-earned money.

Don’t take anyone else’s word for it and use as many sources as possible to do your own research on coins before you buy them.