I’m a cash professional – these are the widespread errors costing crypto buyers a fortune: JASMINE BIRTLES

We’ve all heard worrying stories about investors who have lost fortunes through cryptocurrencies, either by having it stolen or by investing in fraudulent schemes.

These make it seem like the cryptosphere is one big casino where you could win or lose your shirt on a single roll of the dice.

New investors often approach it in this way, and then wonder why they fall over their feet with their first attempts.

But cryptocurrency should be approached in a similar way to any of the riskier investments. Following basic rules will save you from some avoidable errors that newbies often make.

Here are some of the top mistakes that I have come across.

Jasmine Birtles has been trading the digital coins for years

1. FOMO (Fear Of Missing Out)

Many beginners buy into a coin simply because there’s a buzz about it, without understanding its purpose or technology or whether it really has intrinsic value.

In January, US President Donald Trump launched a so-called ‘meme coin’ which soared within days from around $7 (£5.40) to a peak of $75 (£57.84).

It plunged again soon after, and is now worth around $11. (£8.48).

Those who dashed to buy it when the price was surging may have lost dearly – especially if it was near its peak. The coin may not return to the highs.

To avoid rash decisions, if you’re serious about investing do some research first: read articles on websites such as Coindesk, look at its ‘whitepaper’ (the description of the coin written by its creators), check for real-world adoption and community support, and try to dampen down your excitement (or greed).

2. Ignoring Security

It’s far too easy to click on scam links, fall for fake giveaways or trust unverified platforms and lose money.

You need to keep a sceptical attitude to direct emails, texts or social media interactions connected to crypto.

Never share private keys or password phrases, even if someone claims to be from ‘customer support’. Use two-factor authentication on crypto accounts for added protection. This requires you to confirm your identity to log in to an account using two methods, such as email and texts.

3. Investing more than you can afford to lose

This is a fundamental rule in all investing, but particularly when it comes to riskier assets.

Crypto is volatile and can be highly risky. New investors sometimes get over-excited and go all-in on a new, fashionable coin, or invest borrowed money, which makes losses even greater if the investment goes south. Only invest money you can afford to lose entirely. And diversify your investments – don’t put all your money into one coin or asset.

The Bitcoin and Ethereum cyptocurrencies are popular

4. Crypto is taxed!

Many new investors think crypto gains are tax-free.

Any profit you make by selling crypto is taxable, and subject to capital gains tax if it exceeds the annual exemption. Make sure you keep records of every trade to avoid issues with HMRC.

Check if you have to pay tax when you sell at gov.uk/guidance/check-if-you-need-to-pay-tax-when-you-sell-cryptoassets.

5. Panic selling

Many beginners panic when prices drop and sell at a loss, instead of holding or strategically managing their investments.

I did this in 2017, but would have been wiser to hold on and wait for issues to get resolved. So, understand the volatility. Instead of reacting emotionally, have a clear strategy such as putting in regular, small amounts each month.

6. Using a dodgy exchange

Dodgy coins and exchanges spring up all over the place, often promising discounts, when they are actually just criminal enterprises.

Use an established exchange. In the UK, some of the most popular are Kraken, Coinbase, eToro, Crypto.com and Coinjar.