The past few weeks has seen the sharp rise in the price of a single Bitcoin to over R600,000 and then a sharp drop again. If you are a Crypto geek, you would have seen that other major cryptocurrencies tracked a similar trajectory on all exchanges.
As prices soar, with return on investments skyrocketing beyond traditional investment mechanisms, laggards to the crypto market flock to exchanges in search of fortunes. Many exchanges, such as the popular South African exchange Luno, aim to make cryptocurrencies accessible to the greater publication, but when there is a lack of understanding around the blockchain and the basic principles of decentralised currencies the opportunity for fraud is rife.
“The space is a little bit like the Wild West. And unfortunately, by definition, the space can never be as tightly regulated as the conventional investment bank space, because cryptocurrencies are decentralised. They don’t have owners; they don’t have call centres or CEOs or headquarters.” Carel de Jager, a lead instructor at Blockchain Academy
Stories of crypto companies scamming customers are becoming more popular. In South Africa, Mirror Trading International has been placed under investigation. It’s expected that investors of MTI will need to pay back any profits they made from the company’s dealing, as it was deemed to be illegal.
If it’s so risky to trade in these currencies, why not just avoid it? Well, the returns can be amazing. Here are a few tips for dealing with the markets:
- Cryptocurrencies, regardless of how ‘mainstream’ they are, are not a sure bet. Don’t bet it all on red.
- Deal with reputable exchanges directly. There is tons of research on these exchanges so make sure you are diligent.
- Don’t let anyone trade on your behalf. If you are grown up enough to invest in an investment that you don’t really understand, you should take the risk on your own.
- If you want to get more info on a company or agent offering you assistance, please feel free to reach out to us.
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