Cryptocurrency’s worldwide popularity is indisputable. It has become synonymous with enormous returns for some investors willing to take, at times, dizzyingly high risks. Its meteor-like rise and potential fast wealth generation aside, the risks remain as high as the prospective returns.
So, what should you know when considering investing in this often volatile, ever-evolving, and increasingly crowded crypto marketplace in 2022?
Cryptocurrency is decentralised, digital money based on a blockchain technology network, unlike traditional money and electronic wallets like Google Pay, Apple Pay issued and backed by banks, governments.
Cryptocurrencies are here to stay, but the challenge is in the forecasting. There are dozens of networks on the market and determining which will survive, much less thrive and dominant is the risky business. First in the space and historical best performer Bitcoin’s multiple corrections in recent times bears this out. Ethereum, also established in the market, may soon overtake it as the most valuable cryptocurrency in 2022 if present trends continue. Diversifying portfolios with Ethereum is an option to mitigate risks, or more conservatively, stock investment in companies with cryptocurrency on their ledgers is another way to enter the space.
Markets will likely normalise as cryptocurrencies become more widely accepted, but risks remain high. Investing in stocks with crypto on their ledgers is safer but yield lower returns.
There is still a long way to go before cryptocurrencies become widely accepted and coexist, much less replace traditional currencies backed by banks or governments that better hold their value. That said, there are significant improvements and functionalities on the horizon in 2022. More businesses and governments are beginning to accept cryptocurrencies for goods and services and with that comes more confidence and rising values of the more established Bitcoin, Ethereum and Solana networks.
Decentralisation means governments don’t control or regulate the currency, so now some countries are creating their own to protect themselves from the threat posed by existing cryptocurrencies.
The UAE government has widely embraced blockchain technology. From the crypto EMCASH, to Smart Dubai, and comprehensive DLD services, it is focused on going above and beyond. El Salvador will be the first country to accept Bitcoin as legal money, with several other nations likely to follow in 2022.
Protecting yourself from potential crypto scams
The rising value of cryptocurrencies such as Bitcoin, Ethereum, and Dogecoin and the attractiveness of controlling your assets and transactions for the first time brings many investors into the crypto market. The lack of oversight also makes them more vulnerable to scams and fraud.
If it’s too good to be true, it’s likely a scam. Triple-check any deal that seems too good to be true before making a purchase. In most cases, it’s best to avoid a bargain that claims a ten-fold return with no explanation. There are also a host of fake mobile apps that look like authentic Bitcoin and others, so be sure to vet potentially fraudulent apps by looking at ratings, reviews, and the legitimacy of the logo.
Spoofing is a popular technological attack, so ensure websites and URLs are correct and only use approved and recognised platforms for transactions. Keep an eye out for redirects, even when you are following links from a trusted source or a well-known specialist in the field. Users are also commonly fooled by enticing deals and promotions from phishing emails that pretend to be from the reputable cryptocurrency website or exchange. Scammers also front as tech support, so confirming tech or troubleshooting contact phone numbers, social media handles, or email addresses is a must.
Hassan Elhais, legal consultant of Al Rowaad Advocates
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