The phenomenon of FOMO (Fear of Missing Out) has led many young people to jump into investing without careful planning. Instead of making profits, many face losses due to impulsive decisions. Cryptocurrency is one of the most popular investment choices among the younger generation today. According to Indonesia’s Commodity Futures Trading Regulatory Agency (BAPPEBTI), around 60 percent of crypto investors in the country are between the ages of 18 and 30. This high number reflects the growing enthusiasm among young people for investing in digital assets. However, this popularity does not mean that crypto is risk-free. As an investor, it’s essential to understand both the potential benefits and the inherent dangers of this type of investment.
In the podcast Financial Freedom 101: Avoid FOMO! Safe Profit Strategies from Crypto on FEB UGM’s YouTube channel, Nofie Iman Vidya Kemal, S.E., M.Sc., Ph.D., a lecturer at the Department of Management, FEB UGM, and a researcher in finance and investment, dives deep into the world of cryptocurrency and shares essential tips for students who want to start their investment journey.
What is Cryptocurrency?
Cryptocurrency is a decentralized digital currency without a central authority or single control point. It relies on blockchain technology and uses cryptographic systems to ensure secure, transparent, and seamless transactions. As a currency, crypto can also serve as an investment asset if it meets specific criteria, such as being useful, possessable, convertible, or tradable, and providing economic benefits.
In Indonesia, cryptocurrency is not recognized as legal tender. However, the government oversees and regulates its trading activities through BAPPEBTI (the Commodity Futures Trading Regulatory Agency). Meanwhile, in other countries, such as the United States and European Union countries, crypto can be categorized as a security or digital financial asset, depending on its characteristics.
“With crypto, trust is placed in the technology, specifically the blockchain protocol and cryptography. This creates a paradox because, on the one hand, crypto needs regulatory support to grow. But on the other hand, of course, governments don’t want their national currencies to compete with bitcoin or other unregulated crypto assets,” Nofie explained.
Types of Crypto Assets
There is a wide variety of crypto assets. Bitcoin was first introduced to the public, followed by alternative coins or altcoins such as Ethereum, Solana, and Monero. Some stablecoins are pegged to fiat currencies such as the rupiah or the US dollar. NFTs (Non-Fungible Tokens) serve as digital certificates of ownership for unique assets, while DeFi (Decentralized Finance) enables financial activities without intermediaries like banks. Some crypto assets are also integrated into the metaverse to facilitate virtual transactions. However, Nofie does not recommend investing in metaverse-related assets, as their adoption is still limited, and their utility is not as clearly defined as other crypto assets.
The Difference Between Investing and Trading
A common problem among young investors is the confusion between investing and trading. Nofie explained the differences between the two. Investing focuses on assets with intrinsic and fundamental value to build long-term wealth. Trading, on the other hand, emphasizes market momentum and is driven by short-term profit opportunities. While investing is about minimizing and managing risk, trading is about actively taking risks to make a profit.
“Many people say they’re trading, but when prices don’t go up, they say they’re investing. Or the other way around. That inconsistency is something I see quite a bit,” he added.
How to Make Money from Crypto
There are several ways to make money from crypto. The first option is mining. However, this method has become less economically viable due to high electricity costs and growing competition from large-scale mining operations.
Another way is trading and scalping. Trading involves buying crypto when prices are low and selling when they rise. Scalping is similar but focuses on quick trades with small margins and relies on high transaction volumes. Both strategies require a lot of market analysis and discipline.
Staking is another option that allows users to lock their crypto assets for a set period in exchange for passive returns or rewards, typically in the form of additional cryptocurrency. A more aggressive alternative is yield farming through DeFi platforms, which allows users to lend crypto in exchange for higher returns, though this method carries more risk than staking.
Another strategic approach is to follow the movements of “whales” or large investors, such as fund managers, hedge funds, investment banks, or large corporations. Then there is arbitrage, or taking advantage of price differences between exchanges, which is also possible by buying crypto on a cheaper exchange and selling it on a more expensive one. However, due to the speed at which prices change, arbitrage is usually done using automated bots or scripts.
Early-stage investments in ICOs (Initial Coin Offerings) or IDOs (Initial Dex Offerings) can also be lucrative, provided investors perform proper due diligence, such as reviewing the whitepaper, understanding the development team, and assessing the project’s long-term value. Finally, the NFT space also offers earning opportunities through flipping, buying, and reselling NFTs with unique value, especially for those with strong market knowledge or social media influence (influencers).
Risks in Crypto Investing
Like all investments, crypto carries various risks. Internally, psychological factors such as FOMO, personal bias, and overconfidence can cloud rational judgment. Liquidity risk is also a concern, as some crypto assets are more complex to convert into cash. In addition, the decentralized nature of crypto means that anyone with programming skills can create new tokens, many of which may have no real value or utility, increasing the risk of fraud or Ponzi schemes.
Externally, systemic risks such as pandemics, global crises, and natural disasters can affect all markets, including crypto. Geopolitical and regulatory shifts also pose challenges. For example, China has repeatedly banned crypto trading and mining activities. Finally, inflation remains another unpredictable threat impacting the broader economic landscape.
Tips for Students Interested in Crypto Investing
Nofie shared practical advice for students exploring crypto. First, it’s crucial to understand the investment product thoroughly. Second, be mindful of your decision-making process; don’t let FOMO or biases influence your choices. Third, build a personal advantage, such as technical knowledge, access to a strong network, or experience in digital asset communities.
In practice, start simple. Try scalping first to familiarize yourself with the market as you gain confidence, progress to trading, and, eventually, long-term investing. Once comfortable, explore more advanced tools such as DeFi platforms, staking, or NFT marketplaces. In addition, being a student is the ideal time to explore. With fewer obligations and more flexibility, students have room to make mistakes and learn.
“When you’re a student, you can explore because you probably don’t have many responsibilities yet. You can use your time, energy, and flexibility to keep learning. Everyone has their path, so not everyone needs to invest in crypto,” he concluded.
Reportage: Najwah Ariella Puteri
Editor: Kurnia Ekaptiningrum
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