Is Bitcoin a scam?
But, there are some people who will try and use new technologies to trick others out of their hard-earned money.
So make sure you take some simple precautions to keep yourself safe when you’re buying or selling cryptocurrencies.
How to keep safe with cryptocurrencies
There are just three simple tips you need to remember to make sure you keep yourself safe
1. Know who you are dealing with
Always buy from reputable sites, or people that you know personally and have met in real life.
Never, EVER buy through companies who have sent you unsolicited emails or called you up to suggest that you invest in Bitcoin. We have heard tales from people that have been approached by online “brokers” such as Millennium FX offering to help them invest in cryptocurrencies. The broker will help them to make the trade… and then they never see the funds again. People have lost hundreds of thousands of dollars through these scams – please don’t be one of them!
And don’t fall for “news” stories about people investing in bitcoin. It’s a common trick to use photos of high profile NZers in fake news stories claiming that they have made lots of money buying cryptocurrencies. The stories are fake, and simply put there to convince you to buy bitcoin through the site… if you do, you’ll never see your money again!
Remember: only buy from reputable sites, or from people that you personally know and have met in real life.
How do I know if a company is reputable?
In New Zealand, all companies that are offering financial services must be registered Financial Services Providers. You can search the FSP register online, for example, here’s us!
It’s also really important to make sure that the person or site you are interacting with is the real thing. Anyone can create a fake website in the same name as a registered NZ business, but have nothing to do with that business at all. It can be difficult to know when you’re looking at a fake site, so look for external proof that that site is genuine, for example:
- Does the Companies Office record link to the same website?
- Does the site link to active social media accounts that in turn link back to that same website?
- Ask around about the site – e.g. on Facebook groups or Reddit and see if anyone else has used them.
2. Store your currency safely
The golden rule with cryptocurrency is to hold your own private keys. If you don’t control the private keys, then the money isn’t yours.
The best wallet for you will depend on how much crypto you are storing, how accessible you want it to be, and your own preferences e.g. whether you feel safer with something stored physically or electronically.
Our top three picks for the best crypto wallets are:
1. A high-quality cold hardware wallet like a Ledger Nano, is an excellent option for long term storage. Make sure that you safely store your passphrase, and then even if you lose the physical device you can simply re-install your old wallets on a new Nano. Phew! You can browse the Ledger shop here.
2. Hot wallets are great for smaller amounts or if you are frequently sending / trading your portfolio. For a free, user-friendly hot wallet take a look at Exodus – a multi-currency wallet that can be found here.
3. Or if you want both cheap and safe, go DIY with our guide to setting up your own cold storage system.
3. Do your own research
If you don’t understand how to get a wallet, or what a private key is, take the time to learn about how cryptocurrency works before you invest
If you want to get an introduction into the three most popular cryptocurrencies, you can click here for a simple overview.
If you want to see a simple overview of the basics of cryptocurrency, you can find our basic rundown here.
If you want to see the reasons why people buy cryptocurrency, you can find our analysis here.
Once you’re schooled up on the basics, head to our walkthrough on ‘how to get started with cryptocurrency‘
Don’t invest in something just because others tell you to – know what you’re getting in to. If you don’t understand it, then take the time to learn a bit more before you dive in.