Cryptocurrency Lending Platforms are a Risky Proposition
The cryptocurrency environment does remind me of the very early days of online gambling, with everyone scrambling around to try and earn as much money as they can!
However, due to the complexities of cryptocurrencies and as many people simply do not have a clue how they work, but read stories of great fortunes being made, lots of people are very eager to jump onboard and try and cash in from them too.
Scamsters and fraudsters are also looking to cash in from the uneducated and first time cryptocurrency investors and users, and as such you do need to find out and very quickly too, just how such schemes operate and how they can rob you of your savings and investment funds.
Lending platforms are one way that a novice user of cryptocurrencies can be taken in by the hype in regards to the value of cryptocurrencies, and as such you are going to see no end of them being promoted on websites such a YouTube.
The basic idea of how a lending platform works is that you are required to invest one cryptocurrency and exchange it for the cryptocurrency that lending platforms uses, and by doing so you will be “guaranteed” a return on your investment, as your funds are being used to trade on the value of other cryptocurrencies.
Many lending platforms will claim to have a special “bot” that is going to place trades on the value of cryptocurrencies, and that bot will be designed, in their words not mind, so they can guarantee a return on trades placed using it. That is of course total nonsense!
Lending Platforms Are Usually Ponzi Type Schemes
Ask yourself this very simple question, if someone had managed to design a trading bot that could guarantee them a profit when they place trades on the value of cryptocurrencies, why on earth would they want to help other people to make money from that bot?
If they had any sense they would simply send it to work with their own funds, and would generate some huge profits which are theirs and do not need sharing out with other people.
Sadly, a huge number of people get taken in by these schemes every single day of the week, and how they have been designed is quite clever when you think about it.
As the lending platform will use their own unique digital currency, usually a token of one of the other major cryptocurrencies, their investors are turning for example Bitcoin into that other cryptocurrency token unique to the lending platform, the operators of those schemes instantly have access to their investor funds.
As soon as they have earned enough from investors investing in their lending platform they will either run off with their investors Bitcoin or will invent a scenario resulting in their investor’s funds being lost and leave them holding that now worthless token.
If you have no experience of trading in cryptocurrencies, then I would urge you to avoid using a lending platform for the reasons outlined above.
Spend Time Researching Your Cryptocurrency Investments
If you do fancy jumping on the cryptocurrency bandwagon, then you need to spend a lot of time researching just which cryptocurrency to invest your funds in.
Not only that but you will have to get a clear understanding of just how cryptocurrencies work, and that is often going to take you a lot of time due to the often technical terms and sayings you find on cryptocurrency guides and articles!
If you do not understand what you are investing in then you will stand very little chance of actually making a profit from your investments, and an uneducated cryptocurrency investor is often described as being a lamb to the slaughter and many of them never make a single penny of profit from their investments either!
Never be taken in by claims that a website, company or lending platform can guarantee you a profit, for in the world of cryptocurrencies especially, there is no way of knowing which ones to invest in to make a profit.
If you are unsure of what you are doing, then either spend as much time as is required understanding the finer points of cryptocurrencies, do look somewhere else to invest your hard earned money in, if you do not do so then you risk losing those investments, which a lot of people day in and day out are sadly doing and you will not want to become one of them.