Crypto trading is not the answer to solving your debts

Written by Hannah S on 4 November 2021

With films like The Wolf of Wall Street glamourising the world of trading, there’s been a surge in people finding new ways to maximise their income in an attempt to ‘get rich quick’.

The pandemic hasn’t helped. According to FCA data, over two million Brits are now investing in cryptocurrencies, following a massive increase in ‘stay-at-home investing’ during the past couple of years.[i]

The reality, though, is this is leaving more people in problem debt and in turn having a really negative impact on mental health when things go wrong.

What are we talking about here?

There are several digital currencies and terms you may or may not have come across before, and it can get quite confusing – or shall we say, cryptic?

Here’s a summary of the terms so you know what to look out for and be careful of.

  • Cryptocurrencies
    • Digital currencies maintained by a decentralised system using cryptography (so not regulated by the FCA)
    • Value is very volatile and unpredictable – so major losses are common
    • The lack of regulatory oversights can lead to people being made vulnerable to scams and frauds[ii]
  • Meme stocks
    • Meme stocks are stocks that gain sudden popularity on the internet and lead to sky-high prices and unusually high trading volume
    • Generally very risky – a meme stock’s value is a result of social media hype and not the company’s performance
    • Meme investors are likely to experience big losses as the stocks become overvalued and their price dramatically plummets[iii]
    • This kind of trading is not that much different from gambling. The odds are heavily stacked against anyone trying to outsmart the market
  • Forex trading
    • Also referred to as foreign exchange trading – this involves the trading of currency pairs – for example, hoping the value of the Euro will increase relative to the US Dollar
    • As with any investment, you could guess wrong – and the trade could move against you.[1]
  • NFTs
    • NFTs – or non-fungible tokens – are built using the same kind of programming as cryptocurrency but, unlike cryptocurrencies (which are ‘fungible’), NFTs can be traded or exchanged for one another
    • Digital creators are making huge profits from NFTs, but the risk of cyberattacks and online fraud is high[iv]

We can help you become debt-free, without the need for risk

When you’re already struggling with debt, it’s understandable you want to get on top of it, but crypto trading – like gambling – could end up leaving you far worse off than you were before.

From the moment you contact us, you’ve made the first step to tackle your debts and get them under control.

We care about your financial wellbeing – in the short – and long-term

If you’re worried about your finances or have run into problem debt as a result of crypto trading or gambling, we’re here to help.

Your adviser will work closely with you to work out your budget, and see how much you can realistically afford to repay your debts.

We also work with several leading charities, which offer support to those who have been affected by mental health issues, illness, addiction and domestic abuse, so if you need additional help with other aspects of your life, we ensure you have all the support you need.

Click here to regain control of your finances and start your journey to becoming debt-free.

 

[1] Top 8 Forex Risks for Traders | Online Trading Academy

[i] Over 2million Britons Now Invest In Cryptocurrencies Like Bitcoin – Todayuknews

[ii] What are the risks of cryptocurrency? (ilounge.com)

[iii] Meme stocks: What are They and Why You Should Be Careful Buying Them (cnbc.com)

[iv] Challenges and Risks Associated with Non-Fungible Tokens (NFTs) – News Priviw


Filed under Living in Debt

This article was checked and deemed to be correct as at the above publication date, but please be aware that some things may have changed between then and now. So please don't rely on any of this information as a statement of fact, especially if the article was published some time ago.

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