Dear Ask an Expert,
My son recently started investing in non-fungible tokens (NFTs) and cryptocurrencies and, after experiencing some promising wins, is encouraging me to do the same.
I am increasingly tempted by the quick returns on offer, but I keep reading about fraudulent schemes that make me nervous.
It seems like these kind of investments aren’t going away, so how do I best protect myself from the threat of fraud and how easy is it to recoup lost monies if I was to be a victim?
MN, 56, from London
Amy Harvey, Of Counsel at Peters & Peters writes:
Talk of cryptocurrencies is everywhere and success stories like your son’s have tempted many others in. However, investing present unique risks, which you should consider carefully before taking the plunge.
Firstly, crypto markets can be volatile and prices can change rapidly. For example, one Bitcoin worth $67,540 on last November but had fallen 43pc four months later. Assets can also be subject to intense hype, which can cause prices to initially surge and then crash.
As you identify, another big risk is fraud. The anonymity of crypto assets creates the perfect environment for scammers looking to prey on unsuspecting newcomers. There have been a number of high-profile scandals in recent years, such as the OneCoin Ponzi scheme. It duped investors worldwide out of around $4bn (£3bn).