Cryptocurrency Scams: How to Invest Safely
As Bitcoin continues to gain mainstream acceptance, the crypto market remains plagued by scams. Even savvy investors can fall prey to these scams, but there are ways to safeguard your investments and avoid getting duped.
Investing via ETFs: A Safe Bet
One of the safest ways to invest in crypto is through exchange-traded funds (ETFs). You can buy and trade these ETFs just like tech stocks, and they come with the seal of approval from the Securities and Exchange Commission (SEC). This explains the popularity of new spot Bitcoin ETFs.
As new ETFs roll out for other cryptocurrencies beyond Bitcoin, you’ll be able to diversify your crypto holdings. For example, the SEC recently approved new ETFs for Ethereum, and some have suggested that Solana might be the crypto next in line after Ethereum to get its own spot ETF.
ETFs: A safe way to invest in crypto
Choosing a Trusted Crypto-Trading Platform
While an ETF-only strategy might be too limiting for many investors, you’ll need to find a safe place to buy and sell your crypto. Cryptocurrency exchanges like Coinbase Global are a popular choice. Since Coinbase is regulated by the SEC, it has strong safeguards built in. For example, Coinbase won’t list a crypto for trading unless it meets certain key criteria.
Coinbase: A trusted crypto-trading platform
But Coinbase is hardly the only option. There are dozens of possible options, and it’s essential to do your own due diligence. Remember, everyone thought FTX was a trustworthy cryptocurrency exchange until it collapsed in November 2022.
Setting Clear Investment Rules
To avoid cryptocurrency scams, it’s crucial to set clear investment rules. Avoid cryptos with tiny market caps and limited trading liquidity. As a general rule of thumb, stick to cryptos offered on top crypto exchanges and those with a market cap of at least $1 billion.
Market cap: A key factor in avoiding scams
Perhaps the best advice is to avoid any crypto that appeals to get-rich-quick investors. Meme coins, in particular, should be off your investment radar. While they can soar in value briefly, their long-term appeal is limited.
Being a Better Educated Investor
At the end of the day, the better educated you are about crypto, the better off you’ll be when it comes to avoiding classic crypto scams. Familiarize yourself with the basics of blockchain wallets, and you won’t be tricked into giving away your cryptographic keys to an unscrupulous scammer.
Blockchain wallets: A key to safe investing
As the regulatory environment tightens up, and big Wall Street investors get involved with crypto, the risk of scams will likely decline over time. But until then, it’s worth exploring the safest ways to invest in crypto.
