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A Lincolnshire man has warned people to be careful and do their research before investing in cryptocurrency, after he lost £3,000 on his credit card.
Craig E, an NHS worker in his 20s, first became interested in the stock market and the viral craze of cryptocurrency when seeing a social media frenzy about virtual currencies and the power platforms hold over the stock market.
Cryptocurrency is a digital means of exchange that operates without the backing of an authority, such as a bank or government.
They are entirely online, sort of like virtual tokens, and all transactions are noted on something called blockchain technology, a type of database that is essentially a public forum of all crypto transactions.
READ MORE: What Is Cryptocurrency? An article by Forbes
Upon entering the world of cryptocurrency, Craig was influenced by the work of social media platform Reddit, whose users had pushed the growth of a meme-based cryptocurrency known as Dogecoin.
Dogecoin was created as a joke, but after backing from Elon Musk, the price soared. | Photo: Adobe Stock Image
“I wouldn’t have gotten in to crypto, or at least alt coins, if it hadn’t been for the virility of them,” Craig said.
“Dogecoin has drawn lots of attention, and it’s kind of a gateway for those who are bored and want to make a quick buck.
“I am sure many people have made a lot of money, but there’s also lots of people, like myself, who have lost money, and never really had the chance to make it.”
Craig had naturally been drawn to Bitcoin as a choice of currency, but the large value (1 Bitcoin is worth over £41,000) put him off, so he instead opted for a cheaper alternative in Safemoon.
Craig bought BNB, a form of cryptocurrency, transferred it to an online wallet and exchanged it for other tokens.
After putting small amounts of money into Safemoon, he saw instant results and his investment’s value soared four times within days.
He was told by other users that the figure would only rise, and upon believing them, Craig was encouraged to use his credit card as it would “easily double and pay back the very next day.”
With that in mind, Craig bought £4,000 worth of the tokens on Safemoon, but his story did not have a fairytale ending.
The very next day, his investment was worthless. This is either due to people quickly selling to drop the price, or the liquidity being taken away, also known as rug pulling.
Craig managed to salvage £1,500 from his initial investment, but the rest disappeared.
He acknowledges that he maybe wasn’t as prepared as he should have been, but also likens the cryptocurrency community to that of a Ponzi scheme.
“You are encouraged in the Telegram groups for the coins to shill – encourage more people to invest and drive the price up, but in reality if that happens, those who were in earlier sell to recoup losses or make profit. It does almost feel like a Ponzi scheme.
“A lot of it is my own fault, I should have known better than to risk money I didn’t have, and I should have been more cautious and did research with my potential investments.
“But the prevalence on social media, the echo chambers, and even the attention in mainstream media outlet, lulled me in to a sense of security, and I thought I would be in, double my money overnight, and get out.”
Craig urged people not to end up like him, and to do their research before investing.
“I wouldn’t suggest people to not invest in stocks or cryptocurrency, but to fully evaluate the potential investment, do research in to them, and be sure that you’re investing something you believe in and if you’re a casual investor, invest in something for the ‘long term’ growth it could offer.
“For cryptocurrency, stay to centralised exchanges, like Binance, and don’t put any serious money in to cryptocurrency that are a joke (and again, do your research).
“Finally, never invest money you couldn’t afford to lose. I did, and it’s devastating. I’ve learnt the lesson the hard way, don’t follow my footsteps.”
