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The Financial Conduct Authority (FCA) this month released a study that found that 2.3 million people own crypto assets in the UK, a big increase from 1.9 million people last year. . Express.co.uk spoke with cryptocurrency experts about some of the top risks of investing in cryptocurrency.
Crypto scams
As the cryptocurrency market has grown, many people have fallen victim to crypto scams.
Erica Stanford, cryptocurrency expert, cryptocurrency lecturer at Warwick Business School, founder of the cryptocurrency network and author of Crypto Wars: Faked Deaths, Missing Billions and Industry Disruption ?, told Express.co. uk: “Most talked about is the risk of falling victim to one of the many scams plaguing the crypto space.
“Unfortunately, as with any emerging technology – but it is much more extreme in the digital money space, where the payoffs can be high – many opportunists have taken advantage of the hype and there are many scams, often vast ones. and very sophisticated.
“These scams use smart marketing, often multi-level marketing, and will stop at nothing to target their victims. You have to be vigilant.”
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Volatility of crypto markets
One of the “most common” risks of investing in cryptocurrency is the volatility of the cryptocurrency markets.
Ms Stanford said: “The crypto markets are highly manipulated and prices can skyrocket and collapse tens of percent in a day.
“There are so many factors that influence these markets – from individual tweets to changes in government policy – and these factors cannot be predicted, so it can be very easy to lose money.”
Anyone considering investing in cryptocurrencies should be aware of the volatile nature of the cryptocurrency markets.
Jeremy Cheah, professor of crypto-finance and digital investing at Nottingham Business School, told Express.co.uk: “Investing in cryptocurrency comes with a lot of risks.
“For example, platform shutdown, lack of regulation and enforcement to protect investor rights, high crypto price volatility driven by sentiment trading (irrational exuberance), threat of mining shutdown by the government, for example in China recently, lacks fundamental data or intrinsic value – i.e. not backed by guarantees or assets, bugs in codes, etc.
“People should always do their research and be aware of the risks of investing in crypto before investing.”
The information in this article does not represent financial advice. Anyone considering investing in cryptocurrency should understand the risks involved.
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