Tips to Reduce Risk in Crypto Investment

Everyone has the right to market crypto assets to many people, but everyone also has the right to decide for himself which crypto asset he chooses. The level of risk will depend on everyone's financial ability.

KOMPAS/ADITYA DIVERANTA

Victims of the Edccash fraud case show the display of the blocked Edccash application, Wednesday (11/17/2021), on the sidelines of a trial at the Special Class 1A Bekasi District Court, Bekasi City.

It would certainly be inappropriate for someone who has just learned to drive to use a racing car as their vehicle. For them, a city or SUV car would be better because it is easier to control. In the investment world, crypto assets are similar to racing cars. Meanwhile, savings, deposits or stocks are like city or SUV cars.

That is the analogy of investment instruments described by investor and investment expert, Ryan Filbert. According to him, many people always think of finding a fast way to achieve success without understanding that the speed also brings a number of consequences.

"The best thing is we should not consider that crypto is a shortcut to get rich quick," he said in Jakarta on Monday (8/11/2021).

Also read:

> Crypto Scammers Use MLM Network to Lure Victims

> Understanding the Risks of Crypto Investment

In this case, Ryan reminded the public to first study the risks before investing in crypto assets. If someone invites you to invest in a crypto coin, make sure the coin has its own blockchain or is managed by blockchain technology. Even if it does not have its own blockchain, at least it should be backed by a verified blockchain.

That way, the public can recognize fake coins that are created just to “pump and dump”. In a pump and dump scheme, a developer of a crypto asset often spreads misleading information to create a buying rush so that the price will increase sharply.

KOMPAS/ADITYA DIVERANTA

Visitors attend the trial of the Edccash fraud case at the Bekasi District Court Class 1A Special, Wednesday (11/17/2021) with the defendants namely the founder of Edccash Abdulrahman Yusuf and his friends.

Parameter

The chairman of the Investment Alert Task Force (SWI) Tongam Lumban Tobing said crypto price movements were so fast that they were considered as high risk. Therefore, only those who were financially literate should invest in crypto assets, he said.

"Don't think of crypto as a normal investment that just anyone can do," he said.

So far, the SWI has used three parameters to define that a crypto investment company is illegal. These parameters can also be used as a guide by the public before determining which crypto assets they will buy.

The first parameter is that the company does not have a permit to trade a crypto asset. In this case, there are a number of companies that have offered crypto products to investors but they have not obtained a license from the Commodity Futures Trading Regulatory Agency (Bappebti) to trade crypto assets. By the end of 2021, at least 12 crypto traders and 229 cryptocurrencies had obtained licenses from Bappebti.

Also read:

> Problem of Investment Literacy

> Investment Scammers Use Crypto for Cover

Second, the companies sell their crypto products with a promise of a big and fixed return. The companies that offer crypto assets with a profit of 1 percent per day, for example, tend to be irrational given the volatility of the value of the crypto assets.

Third, the offer is made through a tiered marketing scheme or multilevel marketing (MLM) with a “member get member model”. "If there is an offer of crypto assets that gives bonuses to members based on their ability to recruit a new member, or with a pyramid scheme, we indicate that it is illegal," Tongam said.

Regarding the crypto trading robots that have appeared recently, Tongam said the trading robots were just trading tools. When people are asked to invest with a promise of a big profit using the crypto trading robot, it can be concluded that the trading robot is illegal.

KOMPAS/ADITYA DIVERANTA

Front view of the Edccash.com site when viewed through The Wayback Machine archives. Photo taken on Friday (12/31/2021)

Choosing a "wallet"

One of the founders of Crypto-Watch Indonesia, Christopher Tahir, advised that the people who wanted to invest in crypto assets should choose a wallet managed by an exchange, or place to buy and sell crypto, that is registered in Indonesia. Avoid choosing a wallet from an exchange that is registered in a country that is difficult to reach.

As for personal wallets, choose an open source wallet (open to the public). Also choose a wallet that has an integrated security system. For example, the wallet has a fingerprint lock system and has a security feature in the event of a criminal act.

Everyone has the right to market crypto assets to many people, but everyone also has the right to decide for himself which crypto asset he chooses.

The acting head of Bappebti, Indrasari Wisnu Wardhana, asked the public to fully understand crypto assets and their trading and settlement mechanisms before investing in this risky investment product. In addition, make sure the funds used are "cold funds" or funds that are not used for daily needs.

In the end, everyone has the right to market crypto assets to many people, but everyone also has the right to decide for himself which crypto asset he chooses. It is important because the level of risk will depend on everyone's financial ability. (FRD/JOG/DIV/BIL)

This article was translated by Hendarsyah Tarmizi.