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Redditor bet life savings on Bitcoin and lost it all

Redditor bet life savings on Bitcoin and lost it all
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A cautionary tale from the Bitcoin subreddit (Getty Images)

The Bitcoin boom has greeted an unfortunate Reddit user who lost his life savings.

With extensive work on cryptocurrency, user Prudent_Plum_7644 has posted an account that’s painful to try and a warning to others.

He wrote in the post on the Bitcoin subreddit: “I totally screwed up guys, my life savings are gone forever, I learned a devastating hard lesson.”

He details how he and his wife collected 1.7 BTC which, at current rates, is about £58,400. He said it took them ten years to hoard money, save as much as possible, and take on odd jobs where possible.

Then he started to trade.

He wrote: “I started a futures trade and managed to convert 1.7 BTC to 2.1 BTC, which is classic luck for beginners.”

Unfortunately, he put all the money into a type of trade called leveraged futures – betting that the value of bitcoin will continue to rise.

When he fell, he says he lost everything.

He wrote: “Of course the order was not executed, BTC went from touching $50k to $47,000 and our lifetime savings were wiped out.

I still haven’t said anything to my wife, she doesn’t know it and it’s killing me from the inside. I just don’t know what to say to her, I’m simply devastated. I can hardly see myself in the mirror.

Ending up pleading for others not to fall into the same trap, the Redditor wrote: “Please follow my advice, don’t trade with guys, don’t fall into these marketing traps like I did.”

To prove his story, he posted snapshots of his future trade slowly being liquidated as Bitcoin depreciated instead of rising.

Screenshots showing money slowly draining away (Prudent_Plum_7644 / Reddit)

Screenshots showing money slowly draining away (Prudent_Plum_7644 / Reddit)

Other Redditors pityed, but reinforced the idea that putting one’s entire money into one deal isn’t a smart move.

One commented, “This is legitimately dangerous and the average investor should not touch it with a 10m pole.”

Another added: Sorry to hear about that guy. Be honest with your wife. Tell her your heart and ask forgiveness. Then make a plan and rebuild your group.

And never try to surprise your spouse by making a move with your combined life savings again. It’s her right to know and not be surprised, whether it’s good or bad.

Galina Stavskaya, Head of Investments at Claro Money, explained: “Future trading is when you agree to buy or sell an investment product at a certain date in the future at a certain price, while setting the date and price of the future transaction today.

“It’s like going into a shop today and saying ‘I’m going to buy this car in two months at £5,000’ and sign a contract to do it.

If in two months the car price is above 5000 – you made money, if the price is less than 5000 – you lose. The trade does not involve any exchange of money today – only the signing of the contract to perform this pre-planned transaction in the future.

The rise of “ultimate influencers”

An employee watches the FTSE index board in the lobby of the London Stock Exchange Group Plc offices in London, United Kingdom, Wednesday, May 29, 2019. While the FTSE 100 index has risen nearly 15 percent since June 2016 in local currency, it is down in terms of the euro and dollar.  Photographer: Luke MacGregor/Bloomberg via Getty Images

An employee watches the FTSE index board in the lobby of the London Stock Exchange offices (Getty)

Anyone looking to try investing or trading should be wary of where they get their information.

The rise of online communities can be a double-edged sword as “ultimate influencers” attempt to influence people towards unrealistic outcomes.

In the worst case, like the situation above, investors can lose a lot of money.

Investment advice is an activity that is legally regulated by the Financial Conduct Authority in the United Kingdom. There are hundreds of people and multiple departments in the FCA who study current products and make rules in order to protect ordinary people from making wrong financial decisions,” Galina told Metro.co.uk.

Regulated businesses and individuals must not only undergo a rigorous due diligence process in order to be regulated by the Financial Conduct Authority (FCA), but must also follow all rules and regulations that are developed. If you take advice from places like Reddit and YouTube without checking whether those giving the advice/recommendation are authorized to do so, you risk making wrong financial decisions and losing some or all of your money.

The emergence of “low income earners” means that the topic of money and investments is more accessible and more widespread, which is a positive thing. However, self-proclaimed experts in the likes of Reddit and YouTube can offer advice that is not regulated or backed by any form of experience or qualifications.

Often, those who share tips on these channels are promoting risky trading on the likes of Bitcoin, which is not suitable for all users. What works for some may not work for others and it is important that people seek guidance and advice from trusted experts who have knowledge beyond their own experience.

Moreover, it is easy to read a single post or watch a quick video from someone you can relate to, and it is easy to understand and make an investment decision based on it.

“However, it is important to look at the broader picture and consider the context of the advice, how this actually relates to your financial situation, and what regulated bodies as well as financial advisors or coaches are considering this specific advice.”

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