Successful investing requires work, yet many people put no more effort into choosing a cryptocurrency than they do in picking a lottery ticket. They listen to what media correspondents have to say, many of whom are just discovering bitcoin themselves. They fall for “buy the top ten”, “the next bitcoin”, hot tips, buy recommendations from self-serving holders of questionable currencies and tokens, and all kinds of other illogical people and places that shouldn’t be recommending anything.
Everyone should learn as much as they can about any potential investment, and that is especially true with cryptocurrencies and initial-coin-offerings (ICOs). They are new and creating a lot of wealth, which makes them a perfect hideout for fraudsters taking advantage of the lack of knowledge people have about them. Even if you know nothing about technology, you can still learn about cryptocurrency as an investment and how to protect yourself.
Risk – Lack of Education
Investing in cryptocurrency is different than regular investments. Because it is global and many of the projects are operating in countries with no investor protection guidelines, it is absolutely necessary to have a lesson or two in cryptocurrency/ICO value and risk. You may be a confident investor in traditional markets, but without knowing the ins and outs of how cryptocurrencies are valued (you will be shocked), as well as what goes on behind the scenes and on the exchanges, your choices may be no better than the investor that uses an “eeny, meeny, miny, moe” strategy.
“Critical to investor protection is having sufficient knowledge of the risks associated with various investments, especially cryptocurrencies and Initial Coin Offerings (ICO).” “ICOs are facing regulatory scrutiny, and investors need to know how these regulations will affect their investment. At present, ICOs represent an extreme level of risk, especially to new investors.” DNotesEDU Prioritizes Investor Protection in Cryptocurrency Education
Risk – The wrong education
Where are you getting your information from? The internet is overrun with cryptocurrency information – How it works, everything you ever wanted to know, tips, secrets, trading strategies, how to invest, how to make money, how to make $millions, and so on. Without an accurate knowledge of cryptocurrency and initial coin offerings, you won’t be able to spot the scams. In general, it is best to steer clear of:
- Any type of cryptocurrency educational material that doesn’t clearly identify the risks
- Educational material from those that promote ICOs and new cryptocurrencies
- Anyone that is charging money for a basic introduction to cryptocurrency that you can get for free online
- Any type of cryptocurrency educational package, often having levels, complicated tiers, referrals, schemes, secrets, hot tips, etc
- The advice of media “experts” that were laughing at bitcoin 6 months ago
The risks above may leave you in the position of falling for claims made through excessive promotion and other tactics. Cryptocurrency is an amazing new technology development that is being exploited by bad actors looking for easy money. There is so much false information being promoted, it is essential to educate yourself. ICOs raising over a hundred million dollars have a lot of money to throw at advertising, flooding news outlets and social media with biased information that makes their project appear popular and valuable.
“Aggressive marketing and paid celebrity endorsements create confusion. A single person getting paid to spam social media from dozens of different social media accounts, can make a project appear much more popular that it actually is. Magnify that activity by 50 or 100 paid spammers, and throw in a paid endorsement from a public figure or celebrity, and the project appears on the surface to be a golden goose.” 10 Reasons to do Your Homework Before Investing in ICOs
Risk Reduction Strategies in Cryptocurrency Investing: