Cryptocurrency Scams Still a Threat: 3 Safe Ways to Invest in Crypto

Bitcoin (BTC 0.68%) could also be on the verge of really changing into mainstream, however the crypto market continues to lack new scams. And it would not matter how huge or skilled an investor you might be. Even billionaires and long-time skilled buyers might be scammed by crypto scammers.

The excellent news is that there are some primary steps you may take to guard your crypto investments and keep away from most crypto scams. Let’s take a better look.

Use ETFs every time attainable

Maybe the most secure method to spend money on crypto is to take a position solely in exchange-traded funds (ETFs) for particular cryptocurrencies. You should buy and commerce these ETFs similar to you’ll tech shares, so there isn’t any studying curve concerned. You need not open new accounts. Plus, you may sleep straightforward at evening realizing that every ETF has the Securities and Alternate Fee’s (SEC) seal of approval. This helps clarify why the brand new spot bitcoin ETFs have been so standard.

As new ETFs for cryptocurrencies aside from Bitcoin emerge, it is possible for you to to slowly diversify your cryptocurrencies. For instance, the SEC not too long ago permitted new ETFs for Ethereum (ETH 0.03%), so they are going to be quickly. And a few have instructed it Salana (SOL -1.28%) may very well be the subsequent crypto in line after Ethereum to get its personal spot ETF.

Select a dependable crypto buying and selling platform

For a lot of buyers, nonetheless, an ETF-only technique might be too restricted. You will have to discover a secure place to purchase and promote your crypto in addition to a cryptocurrency change for instance Coinbase World (COIN -3.77%) are a preferred alternative.

Since Coinbase is regulated by the SEC, it has some sturdy safeguards constructed into it. For instance, Coinbase won’t listing a crypto for buying and selling except it meets sure key standards. And since Coinbase is a public company, it should be clear and supply audited monetary statements. Coinbase additionally has best-in-class safety defending its crypto vaults, so you do not have to fret about cyber theft.

However Coinbase is hardly the one choice in terms of crypto buying and selling platforms. There are actually dozens of attainable choices. The Motley Idiot Ascent has analyzed lots of them and decided which of them are one of the best for getting Bitcoin, in addition to that are one of the best for getting altcoins (ie all cryptos aside from Bitcoin).

It is necessary to do your individual due diligence right here. Bear in mind: everybody thought FTX was a dependable cryptocurrency change till it crashed in November 2022. In hindsight, we now know that former FTX CEO Sam Bankman-Fried was utilizing shopper funds for his personal buying and selling operations on the identical time he was backing celebrities.

Set clear funding guidelines

Lastly, it is necessary to ascertain some preliminary guidelines about which cryptos you’ll spend money on and which cryptos you will not. There’s nothing stunning right here, however cryptocurrencies with a small market capitalization and restricted buying and selling liquidity are more likely to be focused by fraudsters.

Picture supply: Getty Photos.

As a common rule, it’s best to keep away from cryptocurrencies that aren’t provided for buying and selling on main crypto exchanges. And it’s best to keep away from cryptocurrencies which might be under a sure market capitalization threshold. A market cap of $1 billion could be an inexpensive goal now. This offers you entry to the highest 100 cryptocurrencies by market capitalization. However in the event you’re not notably risk-averse, you may enhance that quantity to $5 billion, which is able to restrict you to solely the highest 25 cryptos.

Maybe one of the best recommendation right here is to keep away from any crypto that appeals to get-rich-quick buyers. Sadly, because of this meme cash ought to be off your funding radar. ​​​​​​Whereas standard meme cash can skyrocket in worth for a brief time frame, their long-term attraction may be very restricted. The scenario is even worse for meme cash with minuscule market caps, which are sometimes topic to excessive market manipulation reminiscent of pump and dump schemes.

Be a extra educated investor

In spite of everything, the extra educated you’re about cryptography, the higher you will be at avoiding basic crypto scams. For instance, in the event you plan to retailer crypto tokens in a blockchain pockets, it’s best to familiarize your self with the fundamentals of blockchain wallets. That method, you will not be compelled handy over your cryptographic keys to an unscrupulous fraudster who will use that info to assault your account.

Happily, crypto is changing into increasingly more mainstream, and yearly the crypto market is changing into much less just like the Wild West. Because the regulatory atmosphere tightens, and as huge Wall Road buyers get into crypto, the probability of fraud will lower over time. However till that occurs, it is definitely price exploring the most secure methods to spend money on crypto proper now.