The digital world has made it possible for fraudsters to steal money with relative ease. The internet has also enabled them to send funds anywhere in the world quickly. These factors may explain why cryptocurrency has become a pet payment method for scammers. It’s quick and inexpensive, and most people don’t understand how it works. That’s why our latest Data Spotlight found that reported losses to crypto scams in 2021 were nearly 60 times greater than in 2018.
According to the report, 20-49-year-olds were more than three times more likely to lose money from a cryptocurrency scam than those in their 70s. Using margin (borrowed money) to purchase cryptocurrency can be risky, as it’s impossible to guarantee you will make a profit. If you don’t make a profit, you will have to pay back the loan plus interest, and missing payments can hurt your credit score.
Using margin is a great way to increase your purchasing power when buying crypto, but it’s not for everyone. Before investing in margin, it’s essential to understand the risks and learn some fundamental technical analysis (TA). Investing in crypto on margin is similar to getting a loan to buy a stock you think will increase in price. There’s a chance you’ll make a profit, but it’s just as likely that you’ll lose money and have to repay the loan with your profits.
Thankfully, Mr Nguonly did not end up losing his entire savings. He recovered from the loss by recouping some of it by selling his crypto. But he learned a valuable lesson: don’t use borrowed money to purchase highly speculative investments.
Nguonly grew up in a family that had reasonable monetary practices. As a result, he fast-tracked his college education and graduated in two years with a four-year degree from the University of California, Berkeley. He then got a job at Google as a software engineer, earning close to $194,000 per year, including bonuses and stock units.
While he doesn’t regret investing in crypto, he wishes he had done more research before buying. He is now careful only to buy coins with a history of stability and invests only a small portion of his portfolio in cryptocurrency. The rest of his portfolio consists of stocks and real estate. He is careful to avoid the volatile tokens that are often associated with crypto scams. The biggest lesson he learned is “to only invest money you have and don’t go unleveraged into very speculative investments.”