At Wealth Recovery Solicitors, we deal with a wide range of trading and investment losses and queries and have recovered millions of pounds for our clients so far. Our team is highly experienced in resolving trading scams, but we understand that when you’re in the process of making trades and investments, you’ll naturally have some questions. We want to help you learn more about trading and here, we take a look at some of the most frequently asked questions that investors may have.
Frequently Asked Questions
Cryptocurrency & Trading
What Is Cryptocurrency?
Cryptocurrency is a form of digital or virtual currency, which is secured with cryptography to make trusted transactions. Cryptocurrency uses blockchain technology which then functions as a ledger for the transactions which have been made. There are hundreds of different cryptocurrencies in circulation, including Bitcoin and Ethereum.
Each form of cryptocurrency is designed by an individual and it is usually meant to run on a decentralised system, meaning that no one entity can control it. Cryptocurrency is an unregulated platform and, although this can bring trading rewards for some investors, it does also involve risk. Cryptocurrency scams are very common, so it is important to learn more about the processes involved before investing money.
What Is Bitcoin?
Bitcoin was one of the first decentralised cryptocurrencies. It was created in 2009 and uses blockchain verification technology in order to secure and protect transactions. Just like other cryptocurrencies, Bitcoin is decentralised and isn’t regulated by a bank or government.
When you begin trading or making investments, you will hear the term bitcoin used quite a lot and you may be encouraged to make investments using it. Some people consider Bitcoin a good investment because it has experienced significant growth and accumulated long-term value in the past, but this doesn’t mean that it will always be the case. As with any investment, you should always make a calculated investment that is led by information.
What Is The Purpose Of Cryptocurrency?
Cryptocurrencies were designed to originally be used in the same way that any other currency is used – as a means of payment between people in exchange for products or services that have been purchased. It was meant to enable easy, digital transactions with lower costs than those charged by traditional banks and also to make transactions safer.
With cryptocurrency, money can be sent and received by anyone, anywhere in the world without having to go through different banks or currency exchanges, so can be sent much quicker than traditional bank transfers or payments. Unlike stocks, there aren’t opening or closing market times and it can be done 24 hours a day, 7 days a week. It is also believed to be safer, as cryptocurrencies use a decentralised system which is designed to not fail at any certain point.
What Is A Cryptocurrency Scam?
The rise in interest in cryptocurrency has also led to an increase in the number of cryptocurrency scams. Scammers are using old and new scam techniques to steal money from investors and traders. Cryptocurrency scams have the aim of stealing private information, such as personal details or security/wallet codes, or look to trick investors into sending cryptocurrency.
Cryptocurrency scammers will typically operate from fake trading platforms so that it is easier for them to get traders to make unusual investments. With cryptocurrency scams, it’s important to remember that they involve legitimate cryptocurrencies bought through legitimate exchanges. This means that, unlike other wealth recovery solicitors, we won’t just go to the bank and ask for a chargeback. We will, instead, trace the information using the blockchain to unravel where the money has been sent.
What Does A Cryptocurrency Broker Do?
A cryptocurrency broker enables you to buy and sell cryptocurrency with an extra level of protection. Without a broker, you may not be making safe trades and investments. Using a cryptocurrency broker can also be a way in which you can avoid falling victim to trading scams.
How Do I Know A Broker Is Regulated?
In order to ensure that your trades are protected, then it is important that you use a regulated trading broker. In order to ensure that a broker is regulated, then you should start by determining the broker’s name and country of operation. If you are looking for a UK broker, then they must be authorised and regulated by the Financial Conduct Authority (FCA).
Can You Lose Investments To A Regulated Broker?
Yes, you can unfortunately lose your funds and investments by trading through some regulated brokers. When it comes to making trades and investments, most brokers will be confident and have experience in making the trades they recommend.
However, unreputable or inexperienced brokers who act on their client’s behalf and have been asked to make trades they have been instructed to will make their own decisions on what to invest in. This is done in the belief that the risk will pay off and they can benefit from the extra returns. This approach though can often have the opposite effect and, in most cases, the client’s money will be lost.
Another way in which investments can be lost when using a regulated broker is through simply not being experienced enough to make trades on behalf of a client. Instead of making trades using a tried and tested strategy, they will instead trade on their instincts.