New to investing in cryptocurrency? Beware the dreaded 'crypto-millionaire'! — Steemit

steemit.com5y ago

Exactly eight days ago, having watched dozens of YouTube videos focused on the hottest cryptocurrencies just that minute, I hurried to Coinbase, bought $150 worth of Bitcoin, opened a Poloniex account, and threw my money into a market I quite honestly didn't understand in the slightest. Similarly, despite having no idea what a Siacoin is, countless people enter the cryptocurrency game on a daily basis, convinced that getting involved now will result in them becoming millionaires in a few years when most will make little if any profit off of their investment for one (or two) reasons: they never bother to learn how to the cryptocurrency market works, and instead place undeserved faith in the word of any number of Bitcoin gurus when investing their money.

Having had more than enough time to return to sanity since my original investment, although I continue to recognize the value and potential of cryptocurrency, I also recognize that a great many people I've come across on social media who present themselves as cryptocurrency experts fall into one of three categories: those who greatly overstate their understanding of the market, those who greatly overstate the amount of money they've made from the market, and those who do both. Visit nearly any cryptocurrency forum you'd like and you'll find any number of supposed crypto-millionaires, though upon closer inspection you'll discover that the guy claiming to hold 1.8 million Bitcoin and half a million Ethereum is more or less indistinguishable from a guy named Kevin, who first talked to me about Bitcoin back in 2013.

Obviously, I regret not getting involved way back then, as I would have made a ton of money off of my investment. However, you have to consider the source of the information I was receiving. My introduction to Bitcoin came from someone who even now claims to be making money "hand over fist" with his Bitcoin investment, despite still begging friends and family for rides around town, working at Walmart for what he calls "garbage" wages, and living with his mother just as he did four years ago. Now while I admit that I'm likely off on the EXACT numbers, I would hazard a guess that over ninety-nine percent of people on the forums who go on about how much money they've made off of cryptocurrencies are lying just like Kevin does, and in the interest of helping you identify these people and avoid wasting time involving yourself in conversations with them, I'm going to point out a few things I consider telltale signs that a person presenting themselves as a crypto-millionaire is really one of any number of frauds currently infesting cryptocurrency forums.

THEY CAN'T SHOW YOU THE MONEY Imagine for a moment that you're sitting on $2.9 million worth of Ethereum. Setting aside the negligible probability that you'd share your investment strategy with random people you don't know over the internet for free, when at last someone dismissively asks what credentials you've got, it would be easy enough to silence further challenges to your mastery of the cryptomarket by simply showing some sign of the wealth you claim to have, yet you'll find few of these self-proclaimed crypto-millionaires can show you definitive proof they've made enough money off of their investment to buy a cup of coffee, let alone a Bugatti Veyron. Assuming that they can show you evidence that there's millions in their Poloniex account, you don't know that the actual source of that money wasn't the death of a wealthy uncle, so don't be so quick to buy their spiel. Look for signs that they actually know what they're talking about lest you end up wasting time out of your life that you can't get back engaging in protracted discussions with these characters.

THEY PREDICT THE OBVIOUS AND NEVER ACKNOWLEDGE BEING WRONG If you don't have a degree in accounting or some experience with multi-level marketing, many of these characters can be very convincing due to their ability to "talk the talk", so to speak. However, anyone who has ever bought into a MLM "business opportunity", should quickly recognize the all too familiar signs of someone speaking at length and saying nothing. Despite trying to sound like financial geniuses, you'll find that most of these guys completely ignore a coin failing to take off well after they predicted it would, yet rush to take credit for predicting that the value of one coin or another was going to rise when any reasonable person could have reached the same conclusion beforehand. I mean, if I told you the value of Lisk was going to increase considerably in the coming years relative to its current price, I don't think you'd be too impressed. Similarly, you shouldn't put any value in the predictions of someone who pats himself on the back for having previously told you something you already knew, while ignoring the fact that every other crypto on his "Top 10 Hottest Coins Right Now!" list tanked. Even if the guy has a business degree from Harvard University, you should remember that the most he can do is offer his BEST GUESS as to the future value of a coin. His ability to seamlessly intersperse terminology specific to the world of finance into his opinion doesn't change this fact.

THEY ALLEGEDLY MAKE "TONS OF MONEY" REGARDLESS OF WHAT THE MARKET IS DOING Honestly, these are my favorites because they're the most obvious liars of them all. For a statement like this to be true, you would need advance knowledge of what the market was going to do on a daily basis, and I rather doubt "KryptoKid420" has clairvoyance enough to pull that off. Furthermore, these guys check both previous boxes in that they can neither show you any evidence of their supposed financial windfall, and often recommend others invest in obvious future moneymakers while ignoring the fact that previous recommendations failed to bear fruit. Many of these characters don't even bother to try to hide the evidence that they're lying... Look at the background in some of these videos and you can immediately tell that it's a studio apartment. Now do you really believe that a guy making massive amounts of money regardless of what the market does would live in a studio apartment? Personally speaking, I highly doubt it. Of course, it's possible he rents the apartment to film his YouTube videos to avoid the general public locating his mansion and spying on him while he's relaxing, but you and I both know that the chances of that are about as likely as Dogecoin hitting $50 by December (though I'd really, REALLY love it if it did!).

So in conclusion, as several people on YouTube and elsewhere both reputable and otherwise frequently suggest, do your own homework and never take anyone's opinion as constituting financial advice. Also, just so I'm perfectly clear here (because I can see it coming already), none of this is meant as a criticism of EVERYONE discussing cryptocurrency on social media, as I actively follow several people both here and on other platforms, and thus far have no reason to consider any of them to be anything other than what they claim to be. Having said that however, being sold on the value of a coin because someone presents you with charts and graphs doesn't result in them bearing any financial responsibility for your decisions, so the only competent advice I could give anyone thinking about investing a serious amount of money into the market based on my admittedly limited experience thus far is to gain a reasonable understanding of how it works beforehand, and to have a realistic expectation of what you're likely to get out of investing in it. Don't be like I was a week ago, flushing $100 down the toilet in hopes $10,000 comes out the kitchen faucet, as contrary to what many people would have you believe, we won't all become millionaires from investing in cryptos. Somehow, in spite of all the excitement surrounding this coin and that one, I think if only deep down, most of us already know that.