A key problem with crypto or share trading is that it is essentially gambling – it is highly speculative and addictive.
Psychologists claim that the hit you get from a successful share trade is remarkably similar to the one you get from taking drugs.
Charlie Munger, legendary US investor Warren Buffett’s business partner, summed it up perfectly when he said: “In the modern world, people are trying to teach you to come in and trade actively in stocks. Well, I regard that as roughly equivalent to trying to induce a bunch of young people to start off on heroin”.
Another issue with cryptocurrencies is that there is no consumer protection. If you lose your bitcoin password, you have lost your crypto. There is no head office you can contact to recover your password.
If you sign up with a dud crypto trading website and lose all your money, the government won’t come to your aid.
Buying bitcoin is caveat emptor: there’s no safety net and no recourse.
Reports are also increasing about more scams in the crypto space.
I get emails every day offering to teach me how to trade bitcoin and make a fortune. However, if these people are successfully trading crypto and becoming rich, why are they bothering to contact you and me?
You should never “invest” money in cryptocurrencies that you are not prepared to lose, and you should run a mile from anybody who offers to trade on your behalf, or teach you “the secret” to making your fortune.
However, if you are still determined to go ahead with buying crypto, your first port of call should be the Australian Securities and Investments Commission’s Moneysmart website, where a search on “cryptocurrencies” provides you with loads of information, as well as an analysis of the types of cryptocurrencies that are available.
There are also details of the growing number of crypto scams.
This is my last Money section column of the year. My wish for you all is a joyous Christmas and a happy and healthy New Year. Just don’t spoil it by living beyond your means!
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