Understand The Risks First Before Investing In Crypto: Literacy Needs To Be More Intensified

Ethereum, one of the recognized crypto investment products in Indonesia. (Kanchanara/Unsplash)

JAKARTA - There is a phenomenon for novice investors who become accustomed to investing in crypto, which is only seeing big profits in a short time rather than figuring out the risks.

If anyone asks: what is a crypto asset? How do you invest in crypto assets? What are the risks when investing in cryptocurrency-based products? It seems that many do not understand.

It is very important to understand the fundamentals of crypto assets, because the crypto market is very dynamic. Asset prices in a matter of minutes can rise and fall by up to a dozen percent, such as the fall in the value of crypto token valuations issued by Indonesian celebrities, for example.

But actually choosing crypto assets as investment instruments is not a violation of the law, nor is it dangerous as long as we know the fundamentals correctly. Beginner investors should read reports from publishers. Because token issuers usually issue a whitepaper about the token. It contains goals, strategies, including various future plans, because they are plans that may or may not work.

If from the start the potential investor feels that the fundamentals and the project are unclear, don't force yourself to buy the issued tokens.

Illustration of a crypto investor monitoring crypto price fluctuations through an application on a mobile phone. (Unsplash)

Lately, investing in crypto has always been used as a scapegoat for all cases of investment fraud. This arises because many fraudulent investments use crypto assets as a means of payment, even though what happens in cases of fraudulent investments lies in the mode of the ponzi scheme.

In fact, the existence of crypto assets in the midst of the Indonesian people already has a legal umbrella. As said by Jerry Sambuaga, Deputy Minister of Trade of the Republic of Indonesia.

“Before making a purchase of crypto assets, there is nothing wrong with asking CoFTRA about traders or traders and which crypto tokens have been recognized as legal in Indonesia. Currently, it is in accordance with CoFTRA Regulation No. 7 of 2020 concerning the Determination of the List of Crypto Assets that can be Traded in the Physical Crypto Asset Market," said Jerry.

“Now there are 229 crypto tokens that have been registered. These include Bitcoin, Ethereum, Tether, Xrp/ripple, Bitcoin cash, Binance coin, Polkadot, Chainlink, Lightcoin, and others," said Jerry again.

Crypto Literacy Must Be Stimulated

Jerry added, this literacy about crypto must be intensified again by CoFTRA and the Ministry of Trade so that the public understands better and when they invest in a crypto token, they don't make the wrong choice. There are three things that need to be noted in the face of this crypto development, which must be addressed wisely, adaptively, and with clear regulations.

"Once again, be careful before buying crypto assets, don't hesitate to check whether the crypto assets offered are legal or otherwise," Jerry told VOI.

Bappepti noted that in 2021 there will be 7.5 million crypto asset investors belonging to the millennial generation. Meanwhile, according to Tokocrypto's internal data, around 67 percent of Indonesian crypto asset investors are under the age of 34. The Ministry of Trade estimates that crypto transactions in Indonesia throughout 2021 will reach IDR 859 trillion, with 11.2 million customers and a daily transaction value of IDR 2.7 trillion.

Teguh Kurniawan Harmanda, Chairman of the Indonesian Crypto Traders Association (Aspakrindo) when contacted by VOI said that currently the development of the crypto industry is growing very rapidly. This enthusiasm must be followed by doing research first.

“The public must be careful, the hype in the community has led to a lot of tokens or coins, because to release tokens or coins with global standards is actually not easy. There must be testing to meet the standards,” said Teguh.

Crypto ads in the UK. In order to protect consumers, many countries have started to regulate crypto advertising. (Sky.co.uk)

Teguh added that a true crypto project always publishes a complete whitepaper. Similar to a prospectus when a stock will conduct an initial offering or IPO.

By studying the whitepaper, it gives an idea of how the crypto project is going in the future. Another important thing is to research and check the team and partners behind the developer of the crypto asset.

A trusted crypto project makes more sense in its marketing concept, including in terms of solving problems (solve problems), as well as fulfilling aspects of usability (utility). If it doesn't meet this, it should be avoided.

Correct education and promotion of crypto assets should continue to be promoted. Don't let the public again become victims of their ignorance or receive wrong information, especially from celebrities.

The euphoria of investing in crypto assets is expected to end without thousands of investors taking the risk. If you are still used to shopping in traditional markets, you should learn and seek information about crypto before entering the crypto market, rather than floating investment money.