Higher Returns, Higher Risks

For a higher return, you need to take higher risks. This is the most notorious yet adrenaline-pumping statement in the financial sector.


In most recent years we witnessed a shift in the risk appetite of investors whereby the focus is diverting from protecting your investment while achieving a reasonable return to risking high for a potential higher return.


When talking about high returns we instantly think of cryptocurrencies given the historical gains that occurred from multiple currencies throughout the past years. However, cryptocurrency investment comes with a lot of potential risks that investors should be aware of.

  • High Volatility
  • Not regulated
  • Exchange Hacks
  • Software Hacks
  • Beneficiary Risk

Those barely account for 20% of the risks from this industry, however, developers created a lot of ways to tackle those risks.


The United States of America (Figure 1) holds the highest rate of scams and hacks related to the crypto market in 2020, and even during 2021. Then comes South Africa, the United Kingdom, Russia, and China.


Figure 1: Source Chaianalysis


The bigger the network operated, the higher the hacking rate and fraudulent actions. In the year 2021, we witnessed (Figure2) a 23% increase in crypto-jacking on a YoY basis.

Figure 2: Source, SonicWall


Crypto-jacking is a method of mining any cryptocurrency through malware on the users’ devices, whereby the proceeds are automatically cashed out by the hacker. Over 15Million attacks occurred during the past year and the rate is continuously increasing.


The biggest fraud in the crypto market so far is the OneCoin fraud. The company is Bulgarian-based and was founded by Ruja Ignatova and Sebastian Greenwood in 2014. It is considered to be one of the biggest Ponzi schemes in the crypto market, whereby they managed to steal $25Bio. A movie of the whole OneCoin Ponzi is being created in 2022.


Like everything in the world, we have positive effects and negative effects on any action or any investment. We heard a lot of success stories from the acquisition and trade of cryptocurrencies, people became millionaires and billionaires through the crypto market. However, as we said in the beginning, with higher returns come higher risks.


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The content published above has been prepared by CFI for informational purposes only and should not be considered as investment advice.  Any view expressed does not constitute a personal recommendation or solicitation to buy or sell.  The information provided does not have regard to the specific investment objectives, financial situation, and needs of any specific person who may receive it, and is not held out as independent investment research and may have been acted upon by persons connected with CFI.  Market data is derived from independent sources believed to be reliable, however, CFI makes no guarantee of its accuracy or completeness, and accepts no responsibility for any consequence of its use by recipients.