The risks of crypto: what you need to know

Scrolling through TikTok and seeing someone double their money on crypto overnight? Or maybe you got added to a Telegram group promising insane returns? It’s easy to get drawn in but crypto isn’t a shortcut to riches. In fact, the risks are higher than most people realise.

Let’s break it down.

What is cryptocurrency?

Cryptocurrency is a type of digital token that runs on something called blockchain. Think of it as a tech system that records transactions. These tokens aren’t issued by any government, and they don’t exist as physical money. But they’re used, or intended to be used, as a form of payment. That’s why they’re called payment tokens.

Some well-known ones include Bitcoin and Ether. These are the ones you’ll usually hear people flexing about.

There are also other types of digital tokens:

• Securities tokens which are tied to investment products or assets
• Utility tokens which give access to a platform or service

But for most people, when they say ‘crypto’, they’re usually talking about payment tokens.

So… what’s the problem?

The Monetary Authority of Singapore (MAS) has clearly said that crypto trading isn’t suitable for retail investors. That includes most of us: students, NSFs, and young working adults. Here’s some of the reasons why:

1. It’s extremely volatile
   Prices can swing wildly in minutes. A coin can be worth $100 today, and literally $1 tomorrow. A lot of these tokens have no real underlying value. Some are meme coins created just for hype. It’s possible to lose every single cent you put in.
2. Easy target for scams and manipulation
   Crypto prices can be artificially pumped by scammers to lure in investors. Once prices peak, the scammers sell off (aka ‘dump’) their holdings, leaving others with worthless tokens. It’s a common trick and many have fallen for it.
3. Not easy to sell when you want to
   Even if a token is listed on an exchange, it doesn’t mean people are actively buying or selling it. If there’s no demand, you might get stuck with it. Sometimes the buying price and selling price are too far apart to make a fair trade.
4. You may not know who you’re dealing with
   Many trading platforms are run online or based overseas. If they suddenly shut down due to poor management, fraud, or just disappearing, your money’s gone. There’s also no easy way to verify if a token creator is legit or just another flashy startup.
5. Linked to shady stuff
   Crypto transactions can be hard to trace, making them a popular tool for illegal activities like money laundering. If the token or its platform gets caught up in such cases, your investment might be frozen or lost entirely.
6. No password reset if you mess up
   Your crypto is stored in a digital wallet protected by a private key. Lose that key, and you lose access forever. If someone hacks it or steals it, they can drain your wallet, and there’s no bank hotline to call for help.

Final tip: Beware of messages, websites, or chat groups promoting high crypto returns, especially if they name-drop celebrities or say things like ‘guaranteed profit’. These are classic scam tactics. If something feels off, report it to the Police immediately.