Social influence should not be a reason to invest in cryptocurrencies
Cryptocurrencies (cryptos) are all the rage, featuring in headlines across news channels where one day earnings are through the roof, and the next, a scam emerges. Nevertheless, the hysteria continues, as does the cycle. But if you aren’t investing in cryptos, are you missing out? These assets that are not really assets in the traditional sense, hold such promise, or do they?
Bitcoin, to name just one of the many crypto offerings might be tech-based but as soon as humans enter the mix, there is scope for manipulation. People dream up cryptos and they can imagine ways to cheat the system. Cryptos almost seem to exist removed from their creators due to limited regulatory requirements and even further removed from investors, who have no protection but continue to put their money into cryptos despite their somewhat intangible status. There is certainly opportunity and good options at that, but it’s also important to keep an eye out for scams, and to be prepared for losses, of which there have already been many. Here are some examples of what to look out for and stay away from.
Social influence – the glamour
For many, the desire to increase wealth and show it off remains a primary goal. It’s part of the reason why influencers have emerged as an incredibly powerful force, but the wrong endorsements can soon follow. Kim Kardashian needs little introduction and her millions of followers on social media platforms may look to her to inspire the consumer choices they make. Kim promoted a digital token (crypto) about a month before it launched, encouraging her audience to invest. Her opinion has weight, but the danger is she could be promoting a great deal, or it might be a dud. Some platforms have put rules in place to prevent this type of marketing but using the clout of certain individuals remains an alluring tactic. Some of these endorsements may, however, be worth considerably less than the advertising paid to promote them. Be cautious to follow the lead of social media influencers, ensuring you do further due diligence before you invest in any recommendations.
Another point to mention is the luxurious euphoria that can be surrounded by new investments that are outperforming, and cryptos are really enjoying this limelight. There is aspiration in the story of someone poor who now owns a yacht, supposedly thanks to cryptos. Such a scenario may be true, but it can be presented in a way to trick you, or it can be false advertising. Either way, it plays on the desire for more. The rich wanting to get richer, or those just dying to be rich may take on more risk in the hope a gamble pays off. Investing in cryptos can be a dangerous game to play where larger investments can yield huge losses. Don’t be fooled by the ease of signing up – you need to know where you are putting your money before you click ‘invest’.
Social influence – peer pressure
No one likes to miss a good deal but an investment in something dodgy will only mean a good deal of headaches down the line. Friends, family, colleagues, neighbours, the list goes on and you could have more than one crypto-enthusiast in your inner circle, but short of them being qualified to provide financial advice, don’t fall into the trap of taking investment tips from others. There is a degree of peer pressure when you hear someone you know has made an exciting investment. You don’t want to miss out on the next best thing that could change everything financially – but the emphasis should be on ‘could’. Don’t change your plans and do chat to your financial adviser before you take the crypto-investment plunge. Keep in mind that regulation is coming, even if it takes a while, so in time there should be safer options to get crypto investment exposure.
Don’t ignore the reality of TGTBT
If it’s Too Good to be True (TGTBT) then it probably is. The cynic in all of us needs to shine when it comes to investing in cryptos. You should have proof of the validity of the investment before you begin investing. The trouble is it can be difficult to know who to trust and criminals know all the right words to say to convince you. Look out for 20% performance every month – signs like this that make the investment seem less feasible, or TGTBT. Also spot any discrepancies when you ask if the investment is registered.
Being safe online has new meaning today than compared to just a few years ago. While cyber protection is supposed to keep out the bad things, some emails or individuals do creep through. Any investments, cryptos or otherwise that you are involved with should have your trust from the beginning because you triple checked they were good investments to make. Don’t be rushed, foolish or greedy – those are the qualities scamsters look for. Stay alert, patient and always practice your due diligence before making any financial decisions.