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Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you should not expect to be protected if something goes wrong. Take 2 mins to learn more
Estimated reading time: 2 min
Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk.
What are the key risks?
- You could lose all the money you invest.
- The performance of most cryptoassets can be highly volatile, with their value dropping as quickly as it can rise. You should be prepared to lose all the money you invest in cryptoassets.
- The cryptoasset market is generally unregulated. There is a risk of losing money or any cryptoassets you purchase due to risks such as cyber-attacks, financial crime and firm failure.
- You should not expect to be protected if something goes wrong.
- The Financial Services Compensation Scheme (FSCS) doesn’t protect this type of investment because it’s not a ‘specified investment’ under the UK regulatory regime – in other words, this type of investment isn’t recognised as the sort of investment that the FSCS can protect. Learn more by using the FSCS investment protection checker here.
- Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA regulated firm, FOS may be able to consider it. Learn more about FOS protection here.
- You may not be able to sell your investment when you want to.
- There is no guarantee that investments in cryptoassets can be easily sold at any given time. The ability to sell a cryptoasset depends on various factors, including the supply and demand in the market at that time.
- Operational failings such as technology outages, cyber-attacks and comingling of funds could cause unwanted delay and you may be unable to sell your cryptoassets at the time you want.
- Cryptoasset investments can be complex.
- Investments in cryptoassets can be complex, making it difficult to understand the risks associated with the investment.
- You should do your own research before investing. If something sounds too good to be true, it probably is.
- Don’t put all your eggs in one basket.
- Putting all your money into a single type of investment is risky. Spreading your money across different investments makes you less dependent on any one to do well.
- A good rule of thumb is not to invest more than 10% of your money in high-risk investments.
If you are interested in learning more about how to protect yourself, visit the FCA’s website here
For further information about cryptoassets, visit the FCA’s website here
Forbes Advisor has provided this content for educational reasons only and not to help you decide whether or not to invest in cryptocurrency. Should you decide to invest in cryptocurrency or in any other investment, you should always obtain appropriate financial advice and only invest what you can afford to lose.
The Tronix (TRX) cryptocurrency is making headlines after gaining 40% in value over the last month. The Tron blockchain on which it operates has also become the second largest public chain by stablecoin market cap.
For those interested in investing in TRX, who are aware of the risks associated with trading in cryptocurrencies, they may want to go about it the following way.
What is Tronix (TRX)?
Tronix (TRX) is the native currency of the Tron blockchain. Launched in 2017, Tron is designed as a platform for sharing content and decentralised applications (dApps).
This means that Tron aims to be a place where creators can share content without intermediaries such as YouTube or Netflix having to facilitate it, and potentially take their cut.
So, while transactions are possible on the Tron blockchain using the TRX cryptocurrency, that’s not its main function.
Like Ethereum, with which Tron shares its distributed ledger technology, the Tron blockchain has a proof of stake consensus mechanism. This is unlike Bitcoin, which uses a proof of work consensus mechanism.
This means new TRX tokens are not earned by those with the powerful computer hardware necessary to potentially correctly guess massive, unique alphanumeric strings of text (proof of work) – but by those willing to put up their own tokens as virtual raffle tickets for the chance to elect a delegate to validate transactions on their behalf.
At the time of writing, one TRX is worth £0.05 and Tron has a market cap of just over £5 billion.
How to buy Tronix (TRX) in four steps
1. Choose a crypto exchange
To buy Tronix (TRX) an investor will need to use a crypto exchange. This is a website or app where buyers and sellers can make trades.
There are a lot of exchanges to choose from, and we’ve ranked our pick of the 10 best crypto exchanges, but generally speaking someone should look out for when choosing an exchange.
Firstly, investors need an exchange that trades in TRX. And while many do, many others do not.
Next, check what payment methods are accepted and what, if any, fees apply. Exchanges typically offer several methods, but direct bank transfer is usually the cheapest.
Most exchanges have integrated wallets to house the public and private keys necessary to make trades. For those who prefer to use a non-custodial wallet elsewhere, it may help to check if the exchange allows transfers out and what fees might apply.
2. Choose a payment method
Bank transfer is the simplest and cheapest way to pay with most exchanges. Many accept debit cards too, but can charge as much as 3.99% of the purchase price in fees.
A minority of UK exchanges accept PayPal, but this may come with a fee.
Credit cards should not be relied on to buy cryptocurrency. Fees notwithstanding, it is never advisable to take on debt to buy speculative assets.
The volatility of crypto assets has led the UK’s financial watchdog, the Financial Conduct Authority (FCA), to issue repeated warnings to would-be investors. The watchdog says anyone who buys cryptocurrencies should be prepared to lose their investments.
3. Place an order
Once an investor has chosen an exchange and a way to pay, they can navigate to the TRX page on the website or in the app and enter the amount they would like to buy. Once confirmed, the balance should be shown in their account.
4. Choose a storage method
Investors may be happy storing their public key and private key in the integrated wallet provided by their exchange. This certainly makes things simple as everything is in one place and the exchange could help with access problems should they forget their password.
With that said, hot wallets are a target for hackers. Exchanges big and small have been hacked over the years and people have lost serious assets.
Investers can keep their keys more in their control by holding them in a third party, non-custodial wallet, but they’re still liable to be targeted by hackers.
There’s also the option to store keys in an offline ‘cold’ wallet that isn’t automatically connected to the internet. As such, it’s much safer from hackers. The drawback is that investors are solely responsible for access to their wallet, meaning there will be nobody to provide support if they forget their credentials for accessing their keys.
Integrated wallets are usually free, but opting for a non-custodial wallet or a cold wallet in the form of a hardware storage device comes at a cost.
Cryptocurrency is unregulated in the UK. The UK regulator, the Financial Conduct Authority, has repeatedly warned investors that they risk losing all their money if they buy cryptocurrency, with no possibility of compensation.
