Everyone has financial goals that they hope to achieve in life. Some are grander than others, of course, but it doesn’t make any of them less real, meaningful or important to those who hold them. Trying to help lawyers achieve their financial goals, for example, might mean helping them build up their own practice to the point where they’re making millions, buying a huge house and a sports car. At the same time, helping a young blue-collar professional reach their goals might just mean helping them buy their first home.

Different people have different goals, but the principles that help you reach them are essentially the same:

Get Sound Financial Advice and Planning Help

You might have assumed that getting a financial advisor would cost you too much money, but this simply isn’t true. Getting the right advice means getting a clear roadmap to greater financial security and independence, and it’s when you have that map that things start to happen. Financial planning with the help of an advisor creates realistic and achievable goals (see below), and gives you definite targets to hit, which helps you understand better if you’re succeeding or failing at this financial management thing.

Keep Goals Specific and Realistic

If your idea is to become a millionaire in the next 12 months, then most likely you are dreaming. Just as with most life-changing decisions, you won’t get to where you want to be without specific and realistic goals. For example, those wanting to lose weight can’t expect to lose 40kg in a month, or even 6 months. They might set themselves the goal of losing 0.5kg to 1kg per week, a sustainable, realistic and achievable degree of loss.

The same is true for your financial goals. Saying that you want to generate an extra $500 in savings each month, for instance, works in many cases. Making a goal to have enough money for a downpayment on a house within 5 years is another realistic goal. These are also specific and well-defined. Get the combination of specificity and realism right, and you’ll have a clear map to success.

Start as Early as Possible (But It’s Never Truly Too Late)

While it’s never really too late to start saving and planning for the future, it’s always best to start as early as possible. When you start setting money aside in your 20s, for instance, you can build a bigger pot and take bigger risks with your money that potentially will yield greater rewards, with time to restart should things go awry.

Alternatively, starting young also means that you have time to steer clear of risk altogether, investing your money in schemes that yield small amounts in the short term, but are stable and produce much larger amounts of return in the long run.

Wage War on Bad Debt

If you want to achieve your other financial goals like owning a home, starting a business and whatnot, then you have to work to eliminate bad debt from your life as much as possible. This includes credit and store card debt, unpaid bills, car loans, and payday loans. Clearing these high-interest debts leaves you with more money to use for “good debt” acquisition such as a mortgage.

Create Budgets and Stick to Them

Finally, you’ll do far better achieving your financial goals if you create budgets for your living costs and other expenses and then stick to them. This ensures that you’re always living within your means, and always allowing room for money to be saved and stored away for use on more worthwhile financial pursuits.

Whether you’re just starting in life or you’ve been on your own for a while, it’s essential to understand your credit score and improve it, especially if you’re looking into bad credit loan options. Your credit score reflects your financial health and can impact everything from your ability to get a loan to the interest rate you’re offered on a mortgage. Here are five tips every millennial should know about credit scores.

Credit Scores Are Extremely Important

A credit score is a number that reflects the creditworthiness of an individual. Lenders use this number to determine the likelihood of a borrower repaying a loan. A high credit score indicates that a borrower is less likely to default on a loan, while a low credit score suggests that a borrower is more likely to default. As a result, credit scores are an essential factor in determining whether or not an individual will be approved for a loan.

In addition, credit scores can also affect the interest rate that a borrower will be offered. A higher credit score will often result in a lower interest rate, while a lower score will lead to a higher interest rate. For this reason, individuals need to understand their credit scores and take steps to improve their scores if necessary.

Your Credit Score Is Calculated Based on Several Factors

Your credit score is calculated based on many different factors, including the amount of debt you have, your payment history, the age of your credit history, and more. One of the most critical factors in determining your credit score is your payment history. This includes whether or not you have made your payments on time and in full. A history of late or missed payments will negatively impact your score, while a history of timely and complete payments will boost your score.

Another critical factor in calculating your credit score is the amount of debt you have. This includes revolving debt, credit card debt, and non-revolving debt, such as student loans. A high debt-to-income ratio will lower your score, while a low debt-to-income ratio will raise your score.

You Can Improve Your Credit Score

There are many things you can do to improve your credit score. One of the most important things you can do is pay off your debt. This includes both revolving and non-revolving debt. In addition, you should also make sure that you make all of your payments on time and in full. This includes loan and credit card payments, utility bills, and more.

Another way to improve your credit score is to maintain a good credit history. This means using credit responsibly and not opening too many lines of credit at once. It is also essential to monitor your credit score to identify potential red flags.

Credit Scores Need To Be Monitored So You Can Identify And Report Fraud

Credit scores are essential factors in determining whether or not a person will be approved for a loan. A high credit score indicates that a person is a low-risk borrower, while a low credit score means that a person is a high-risk borrower. As a result, people need to monitor their credit scores regularly. There are several reasons why credit scores need to be monitored.

First, if there are any inaccuracies in a person’s credit report, it could lower their credit score. Second, if a person has missed any payments, they will likely reduce their credit score. Third, if a person has applied for new lines of credit, this can also affect their credit score. Finally, if a person’s income or employment status has changed, this could also change their credit score. By monitoring their credit score regularly, people can ensure that they are in good standing with lenders and that they will be able to get the best possible terms on any loans that they apply for.

Conclusion

By following these tips, you can improve your credit score and take steps to protect your financial health. Understanding your credit score is an integral part of taking control of your finances and ensuring that you can get the best interest rates on loans and other lines of credit.

The battle against the coronavirus still rages on. With the release of the vaccinations, we assumed the most awful may be over. Yet with the Delta version, it appears like the danger of infection stays as high as ever before.

To decrease the danger of infection, some public events are being terminated, held off or held essentially instead of face to face. Conversely, some in-person proceedings will certainly continue, yet with unique safety measures in position, such as wearing masks or social distancing.

So this raises two concerns. One, are bankruptcy courts still dealing with bankruptcy cases during the coronavirus pandemic? And if so, just how are bankruptcy courts holding hearings?

Are Bankruptcy Courts Still Open?

Yes. Even when at the start of the COVID pandemic, bankruptcy courts were open for the company. Nevertheless, several courts set up step-by-step changes in how they handle instances.

For example, some courts prolonged target dates or forgoed original signature demands for records that were submitted digitally with the court. These courts likewise held hearings virtually, such as with teleconference telephone calls.

Exactly How Are Bankruptcy Cases Now Being Handled?

With increasingly more people obtaining immunization, several courts are eliminating the above-mentioned short-term COVID-mitigation treatments. As a result, many bankruptcy court procedures are returning to the pre-COVID method of doing points. Nonetheless, individual courts will certainly commonly have discernment to decide how to hold their hearings.

As a result, some bankruptcy courts now have the authority to hold in-person court processes if they so pick. However if they feel it’s best to continue making use of teleconference or videoconference techniques, they may choose to have bankruptcy court proceedings from another location.

Even if a bankruptcy judge makes a decision to hold a hearing personally, celebrations of the situation might occasionally have the alternative to participate practically if they show great reason.

But for the most updated information concerning exactly how a bankruptcy hearing will certainly be held, individuals need to contact official court records or the suitable court authorities to figure out the details rules or treatments pertaining to the hearing.

As if bankruptcy weren’t complicated enough without a global pandemic, each bankruptcy court will have its very own guidelines for dealing with the COVID. In addition to that, each judge will have some flexibility in how they execute those policies. So it’s ideal to seek advice from a bankruptcy lawyer to understand exactly how your bankruptcy proceeding will certainly occur. And also if you do not have a bankruptcy lawyer yet, it could be smart to seek advice from one. Our Trussville bankruptcy attorneys from Huntsville can aid you browse your way via the bankruptcy procedure.

 

Loans provide an effective way to achieve long-term goals, handle unexpected emergencies, and buy expensive items you could otherwise not afford. However, before applying for a loan, you should first determine which type of lender financing is ideal for your needs. Here are nine types of loans you should know about.

Personal loans

These are loans whose proceeds can be used for weddings, vacations, relocation to a new town, medical treatment, debt consolidation, home renovations, electronics, and emergencies. Personal loans have broad repayment terms, often 24 to 84 months. They also come in two forms: unsecured or secured.

Secured personal loan

A secured personal loan is backed by collateral. It could be a title deed, vehicle, or savings account that the lending company could take back if you default on payments. They apply where you want to borrow a considerable amount of money.

Unsecured personal loan

Unsecured personal loans, also known as signature loans, do not require collateral. They are only backed by the borrower’s signature. They are often more expensive than the secured personal loan as the lender takes up all the risk. You also need to have a good credit record to get an unsecured personal loan.

Title loans

You qualify for car, RV, or truck title loans if you own a vehicle. A title loan allows you to borrow a specific amount of money, usually 25% to 50% of the vehicle’s value, and use the truck as collateral. According to the Federal Trade Commission, a title loan ranges between $100 and $5,500. However, a car title loan can be an expensive financing option as you are required to pay a monthly charge of 25% of the principal amount, which converts to a 300% annual percentage rate. You should also pay the loan within 15 to 30 days, failure to which your vehicle is repossessed.

Payday loans

A payday loan is a short-term loan due by the next paycheck. They are a quick solution to your monetary problems as you do not need to have a good credit record as payday loans are not credit-based. They also allow you to roll over the loan if you cannot clear the debt before the next payday. However, they have incredibly high finance fees, often a 400% annual percentage rate (APR). Rolling your loan also means additional costs, so you may pay more than you initially borrowed.

Mortgage loans

A mortgage loan helps you fund the purchase of a property. The purchased home becomes collateral, and your lender can foreclose the house if you fail to pay mortgage payments. Mortgages are repaid within 10 to 30 years. There are various types of mortgage loans, including:

• Fixed-rate mortgages: They allow the borrower to pay the same interest rate throughout the life of the loan.
• Adjustable-rate mortgages: These loans have a fixed interest rate within the initial term. The interest rate changes based on the prevailing market conditions after the initial period.
• Government-insured loans: These are mortgages backed by government agencies like the Veterans Administration (VA) for veterans and active-service employees, Federal Housing Administration (FHA) for low or moderate-income earners, and USDA for low-income persons in rural areas.
• Conventional loans: These are mortgage loans such as the Rural Housing Service (RHS), not funded by government agencies.

Student loans

These are loans offered to outstanding students and their families to cater for living expenses, fees, and tuition in accredited schools. There are two types of student loans: private and federal. Federal student loans are offered by the government, while credit unions and banks provide private student loans.

You might be wondering: federal student loan vs. private student loan: which is better? Federally sponsored loans have lower interest rates and offer forbearance, deferment, forgiveness, and income-based repayment terms.

Home equity loans

A home equity loan, also known as a second mortgage or a Home Equity Line of Credit (HELOC), is a secured loan in which your property is used as collateral. It allows you to borrow a certain amount of cash against the equity you have in your home, the portion of your property not owned by the bank, or the difference between how much you currently owe on the property and the house’s market value. Home equity loans allow you to borrow up to 85% of the equity you have on your home, in which you are paid as a lump sum and allowed to repay within five to 30 years. To determine your home’s equity, you should evaluate your mortgage balance and then subtract it from the assessed value of your property. You can use a home equity loan proceeds for home renovations, credit card debt consolidation, and medical bills, among other projects.

Auto loans

Credit unions, online lenders, banks, and car dealerships offer auto loans to help you purchase a vehicle. You borrow the purchasing amount less the down payment. The vehicle becomes collateral and can be repossessed if you default. An auto loan term ranges between 12 to 84 months and attracts a 1.04% to 13.97% annual percentage rate.

Pawn shop loans

If you need to borrow cash fast, you could consider getting a pawn shop loan. This loan type requires you to bring an item of value to your pawnbroker, including a musical instrument, pieces of jewelry, or an electronic or power tool. The broker assesses the items to determine their value and then offers a loan, often 25% to 60% of the resale value. Pawn loans attract high-interest rates and short repayment terms. The pawnbroker gives back your property when you repay the loan on time. However, if you default payments, the lender can sell the item to recover their money.

Family loans

A family loan is an informal financing option in which you borrow money from a family member or friend. It is suitable when you cannot qualify for loans from lenders or banks. It attracts little or no interest rates and administrative fees. You also do not need credit to secure a family loan. Be sure to draft an agreement and repay the loan promptly to avoid straining your relationship with your friend or family member.

Endnote

Before you borrow money, familiarize yourself with the above loan types to determine the best suitable. Next, set a budget to ensure that you borrow what you can afford to repay within the specified period.

 

Are you looking for more mortgage leads? A good mortgage CRM can help you nurture more leads and turn them into closed deals. In this post, we’ll show you how to get started with a mortgage CRM and how to make the most of its features.

What is a mortgage CRM?

A mortgage CRM, or customer relationship management system, is software that helps you manage your leads and customers in one place. It can help you track interactions with leads and customers, create follow-up tasks and reminders, and more. In short, a mortgage CRM can help you stay organized and efficient when it comes to your mortgage business.

How can a mortgage CRM help you nurture more leads?

Mortgage CRMs offer a number of features to help you nurture mortgage leads. From lead capture forms to automated email marketing and follow-up, mortgage CRMs make it easy to keep in touch with potential leads. The best mortgage CRMs also include lead scoring features, which help you identify the most promising leads and prioritize your efforts. With a mortgage CRM, you can easily track each lead’s progress through the sales funnel and customize your follow-up accordingly. That way, you can be sure that no opportunity is missed and that you’re doing everything possible to convert more leads into closed mortgages.

How to use a mortgage CRM to get more mortgage leads

A mortgage CRM is a powerful tool that can help you nurture more mortgage leads. It allows you to easily track your leads and keep tabs on their progress. You can also use it to send automated email marketing campaigns that will keep your leads interested and engaged. Additionally, a mortgage CRM can help you identify which leads are most likely to close and prioritize them accordingly. All in all, a mortgage CRM can be an extremely valuable asset in your quest for more mortgage leads.

What are the benefits of using a mortgage CRM?

A mortgage CRM can automate many of your lead management processes and make it easier to keep track of your leads. With a CRM, you can:

• Store contact information and notes for each lead
• Automatically send follow-up emails and reminders
• Generate reports on pipeline activity, conversion rates, and more

The benefits of using a mortgage CRM are clear—by automating key processes and having easy access to information, you’ll be able to nurture more mortgage leads and close more deals.

How to choose the best mortgage CRM

The best mortgage CRM for you will depend on the specific needs of your mortgage company. It’s important to find a system that can integrate with your current lead management process, as well as with your other software systems. The CRM should also be user-friendly and easy to learn so that you and your team can start using it right away. Make sure to consider the features that are important to you, such as customer relationship management features, marketing automation, pipeline management, and reporting tools.

Conclusion

A mortgage CRM is a valuable tool for any mortgage company looking to nurture more mortgage leads. By using a mortgage CRM, you can keep track of all your leads, manage your pipeline, and track your progress with each lead. The benefits of using a mortgage CRM include increased productivity and efficiency, accelerated sales process, and improved customer service.

 

 

Cryptocurrencies are a hot investment right now, as they’ve shown tremendous growth in recent years. However, with so many different cryptocurrencies, it can be tough to know which ones are worth investing in. Whether you’re an individual looking to get in on the cryptocurrency craze or a seasoned investor looking to add some new digital assets to your portfolio, here are six leading cryptocurrencies that you should consider buying in 2022:

Bitcoin

Bitcoin is the original cryptocurrency, and is still the most well-known and most valuable, with a market cap of over $1 trillion. As with most cryptocurrencies, Bitcoin runs on a blockchain, a decentralized, digital ledger that records transactions.

However, Bitcoin also has other features that set it apart from the rest. For example, it’s known for having some of the fastest transaction speeds in the industry, and its creators remain anonymous; a rarity among cryptocurrency developers.

Tether

Tether is among the upcoming digital currency trends in the U.S. and is quickly gaining foot in the international market. Its increased usage in recent years is attributed to stable world currencies like the U.S. dollar, UK pound, and the Euro. For this reason, Tether is considered a stable coin and is a great choice to invest in if you’re looking for a digital currency that is not as volatile as Bitcoin. Visit here to learn more about how to buy tether.

Ethereum

If you’re looking for an investment that has the potential to generate high returns, Ethereum is a cryptocurrency you should consider investing in. Often referred to as the world computer, Ethereum is a decentralized platform that runs smart contracts. Its popularity is due to several factors, such as its innovative technology, scalability potential, and a strong community of developers backing it.

Binance Coin

Binance Coin is the native cryptocurrency of the Binance exchange. It was created to be used as a payment method on the Binance exchange and can be used to pay fees and trade a variety of cryptocurrencies. Binance Coin has performed exceptionally well since its launch, providing investors with high returns. Today, Binance Coin is used for trading, booking travel arrangements, and payment processing, besides facilitating trade on the Binance exchange.

Dogecoin

Dogecoin is a Bitcoin fork that was created in 2013 as a joke, named after the popular Doge internet meme. Dogecoin started as a fun and friendly cryptocurrency but has since grown to become one of the most widely used cryptocurrencies. Today, Dogecoin is used for tipping content creators, online gaming, and charitable donations.

Cardano

Cardano is a decentralized blockchain created by the crypto company Input Output Hong Kong (IOHK) and led by Charles Hoskinson, former co-founder of Ethereum. Cardano’s coin, ADA, is one of the most promising cryptocurrencies due to its technological innovations, such as Plutus and Marlowe, which make it an innovative contract platform that rivals Ethereum.

Crypto investing is a speculative and high-risk endeavor. However, if you do your research and invest wisely, you could see substantial returns on your investment. The six cryptocurrencies we’ve mentioned above are worth considering for your portfolio in 2022.

 

 

 

 

Supplemental Security Income (SSI) is a monthly public benefit paid through the U.S. Social Security Administration. SSI benefits are paid on the first of the month. The monthly maximum federal amounts for SSI for 2022 are $841 for an eligible individual, $1,261 for an eligible individual with an eligible spouse, and $421 for an essential person.

An essential person is a helper who lives with a recipient of SSI and provides essential care to the SSI recipient. A person is typically able to get SSI if their resources are worth $2,000 or less. A couple may get SSI if their resources are worth $3,000 or less.

SSI pays benefits to adults and children with a disability or blindness who are on a limited income and have resources below specific financial limits. SSI also pays benefits to people 65 and older without disabilities who meet the financial qualifications. An individual may be eligible to receive SSI monthly payments even if they are already receiving Social Security disability insurance or retirement benefits.

How to Qualify for SSI

In order to be eligible for SSI, a person must:

• be either a U.S. citizen or national or a qualified alien
• reside in one of the 50 states, the District of Columbia, or the Northern Mariana Islands, and
• not be absent from the U.S. for a full calendar month or 30 or more consecutive days.

The medical standards for a disability that qualifies a person for SSI are generally the same as those that qualify a person for Social Security disability insurance, if the individual is 18 or older. For children, from birth to just prior to age 18, there is a separate definition of disability under SSI. The medical standard is based on the severity of a person’s disability. Financial need does not factor into the determination.

A person can apply for SSI by applying online with the Social Security Administration or calling 1-800-772-1213. A local Jefferson County divorce attorney can help with an SSI application by completing the application for the individual and collecting information for their claim. An attorney will also review the application prior to submission. They can be present when the applicant meets with Social Security officials.

How SSI Differs from Social Security

• SSI benefits are not based on an individual or their family member’s prior work.
• SSI is financed by general funds of the U.S. Treasury rather than Social Security taxes collected under the Federal Insurance Contributions Act (FICA) or the Self-Employment Contributions Act (SECA).
• In most states, including Alabama, SSI recipients are eligible for Medicaid. Medicaid pays for healthcare costs such as doctor bills and hospital stays.

76% of Americans say they regret at least one thing in their financial lives. If you regret anything, we don’t want it to be not having saved enough.

But how can you make sure you are saving enough based on your monthly income and household costs?

Don’t worry! We have your back! This article has everything you need to know about how to make a personal budget.

Add Up Your Personal Expenses

Before you can make a budget, you need to go through your bank statements, credit card bills, cash spending, and other bills to add up what you spend on a monthly basis.

Do not leave a single number out to make sure you are budgeting for everything.

Determine What You Can Cut Back On

With the number you come up with, you are creating a list of expenses. And with that, you can go through to see what you can cut back on.

For instance, you could potentially cut back on dining out, decorations for the home, and toys for your dog. You could maybe even cut back on how many groceries you buy if you see that some are going to waste by the end of each week. You can’t, however, cut back on your health insurance bill or car cost along with some other bills.

Most people don’t know that their life insurance can be one of their most valuable assets. In fact, for those that no longer want to pay premiums on their policy, a life settlement is a fantastic way to gain access to cash in times of need.

Consider Alternatives to Costs

There are few household expenses that may seem unnecessarily expensive. If that’s the case, you should go through and see what you could save money on.

Instead of buying paper towels every week, could you buy reusable paper towels and wash them instead? Instead of having to pay a crazy high electric bill, would you consider going green and adding solar panels to your home?

If so, you can discover more about solar.

Think About Savings and Investments

Based on your monthly income and household expenses, you need to think about how much is leftover for you to put into savings or invest.

While it may not seem necessary in the moment, you are saving for the future: That trip you have always wanted to go on, a future kid, and your future child’s college fund. You may even be saving for a wedding or an unexpected accident. Whatever it is, savings are vital.

While many sources say to save about 20% of your monthly income, it doesn’t need to be that high. If you can only save $100 a month, do it. The most important thing is that you save every single time you can.

And when you can, investing your money will set you up for the future as well.

Now You Know How to Make a Personal Budget

Knowing how to make a personal budget can make or break your financial situation. Once you know how to budget, you are better able to save and invest your money for the future.

Love this article? Check out more on the blog.

Making money in the digital currency world is a hot topic right now. With Bitcoin and other cryptocurrencies reaching all-time highs, more and more people are looking to invest in this new form of currency. But how do you get started? In this blog post, we will discuss the basics of crypto investing and provide you with some tips on making money in the digital currency world.

What is crypto investing, and how does it work?

The process of purchasing cryptocurrencies such as Bitcoin, Ethereum, and Litecoin to profit from their future price gain is known as crypto investing. Cryptocurrencies are digital assets that encrypt their transactions and utilize cryptography to control the generation of new units. In 2009, the first and most well-known cryptocurrency, Bitcoin, was founded. Cryptocurrencies are frequently exchanged on decentralized exchanges and can be used to buy and sell products and services. However, cryptocurrency investing entails a significant level of risk due to the high volatility of cryptocurrency values. On the other hand, some investors believe that cryptocurrencies have the potential to become more stable and profitable in the future.

The basics of Bitcoin and other cryptocurrencies

Cryptocurrencies are decentralized digital assets that use cryptography to secure their transactions and to control the creation of new units. Cryptocurrencies are often traded on decentralized exchanges and can also be used to purchase goods and services.

What are the benefits of crypto investing?

Cryptocurrency investing has grown in popularity due to its tremendous profit potential. However, cryptocurrencies are still in their infancy, and their prices are quite volatile. Therefore there is still of possibility for price growth. Furthermore, unlike traditional investments, crypto investing provides privacy and decentralization.

What are the risks of crypto investing?

Crypto investing is a high-risk investment due to the volatility of cryptocurrency prices. In addition, there is the risk of fraud and theft associated with digital currencies. Therefore, it is important to research any platform or currency before investing and only invest what you can afford to lose.

How to get started with crypto investing

If you’re interested in getting started with crypto investing, there are a few things you need to do:

First, you need to choose a platform or exchange where you will buy and trade cryptocurrencies. Some popular exchanges include Coinbase, Kraken, and Binance.

Next, you need to set up a wallet to store your cryptocurrencies. A digital wallet is like a bank account for your cryptocurrencies. You can use an online wallet or download a software wallet to your computer or mobile device.

Finally, you will need to purchase some cryptocurrencies. You can do this by using a credit card, bank transfer, or other payment methods on a cryptocurrency exchange.

The future of crypto investing

Crypto investing is a new and exciting way to make money, but it is also a high-risk investment. Before getting started, be sure to research the platform or exchange you will use, the currency you want to purchase, and the risks involved. With careful planning and research, crypto investing can be a profitable way to earn money.

 

DeFi is considered one of the next big things in the tech world and could revolutionize the way we use the web. Yet many are still unfamiliar with the term and what exactly it means. DeFi is shorthand for decentralized finance. In essence, this means finance without needing any traditional financial institutions or governments. It goes beyond a mere cryptocurrency, as DeFi overall aims to replicate all the power and functionality of the banking system but in an open and permissionless way.

In theory, many people can be onboard with DeFi especially when we’ve seen the excesses and corruption in the traditional banking industry. The global financial crisis of 2008 was caused by the irresponsibility of bankers, but a decentralized system removes the human, fallible element. Yet while there are issues with the old system, it was at least possible for some regulation, which is much harder in the DeFi world. This has unfortunately meant the technology has a huge problem with being used for scams by fraudsters and criminal organizations.

Yotam Dar, a blockchain expert, puts it perfectly, “In many ways, blockchain and DeFi’s greatest strengths also serve as its greatest weaknesses, which makes investing in this industry a risky proposition.”

In this article, we will explore further his explanations for why DeFi is a risk, and what he suggests to do in order to stay safe.

What makes DeFi perfect for scammers

The nature of a decentralized platform means it is much easier to maintain anonymity. At banks, you need to provide lots of documentation to prove you are who you say you are. This isn’t true for all DeFi exchanges. Even if the platform verifies who you are, they currently don’t share such information with law enforcement.

A transaction using the blockchain is irreversible and immutable. In traditional finance, if you see a transaction in your bank statement that you didn’t expect, you can alert their fraud teams who are often able to recover the money and put a flag on the fraudulent account. This option doesn’t exist in DeFi. Once the money has left your account, it’s gone and the record is written in the blockchain. There’s no way to get the money back unless you are somehow able to convince the other party to return your money willingly.

It’s very difficult to know if the other party in a transaction is who they say they are. One common scam is called a “rug-pull”. Fraudsters will pretend they are creating a legitimate product and have professional-looking sites backed by marketing campaigns. They’ll only accept money in cryptocurrency, though, and they’ll soon disappear without any product ever being delivered.

Lack of regulation

In the years leading up to the global financial crisis of 2008, the big financial innovation was the widespread use of derivatives. This meant poor quality assets such as subprime mortgages could have greater worth than the properties they were back by. In hindsight, this was an obvious recipe for disaster but at the time, the product were so complex that regulators failed to understand what was happening in time and the rest is history. People were unwittingly sold worthless assets, and many lost huge amounts of their life savings.

The same situation could be happening today through DeFi. Money is flocking to the system before most people even understand what it is. The financial regulators have been so focused on cleaning up the traditional banking system that the crypto innovators have a huge head start. Regulators will struggle to keep up with the rapid pace of innovation that is occurring in all manner of DeFi assets such as NFTs.

As there isn’t one body responsible for DeFi technologies, then it can be difficult to legislate against and even harder to enforce. If the technology is out there by definition, no centralized body can interfere else it would distort the blockchain and users would flock to a competitor. If regulators decided there were too many scams using Bitcoin, they would have nobody who they could work with to force them to introduce fraud prevention protocols.

Hackers delight

Bitcoin and Ethereum are perhaps the best known DeFi technologies, but there are many more alternatives out there. Many of these platforms overpromise on both returns and security. They tell potential customers that they can earn significant amounts whilst also being 100% secure.

This has been proven tragically wrong in several cases. For instance, the Poly Network was hacked and $600 million stolen, which is a number far beyond what many of us will ever see in our lives. Perhaps the worst part about the attack was that most of the money was returned after. This meant the hackers did it for fun and were able to steal such an enormous amount of money. One might think they barely had to even try. Imagine what would happen if hackers with greater malintent prioritized scams on DeFi as more money flows into the system. It’s clear the blockchain has many security flaws that hackers can expose.

Veteran crypto investor Matthew Roszak expects the market to be worth $800bn in 2022. It’s possible many hackers who currently target traditional finance will see the success of the Poly Network hackers and the size of the DeFi market and decide it’s a wise area for them to invest their time in to maximize their criminal income.

How to stay safe

It’s not all doom and gloom and there are many bright minds dedicated to making the network more secure, even if there are others acting with the opposite intention.

The first thing you need to do is approach DeFi with a healthy level of skepticism. Don’t just take a platform’s claims at face value and if someone asks you to transfer money through an anonymous system, do not be afraid to ask them for traditional finance details if that makes you feel more comfortable.

For each individual platform, you use, do additional research and seek credible resources from websites you’ve used in the past. Make use of your network and ask people who you trust whether they have any experience with the platform you wish to use.

The important thing is to not become too eager and leave yourself vulnerable to scams. Practice safe internet safeguards, such as using secure passwords and multiple-factor authentication when you can.

If you feel confident, start with small amounts of DeFi before plunging in. It could be the future of the entire financial system.