How I turned £300 into £30,000 with crypto. Here’s how you could make money too, the pitfalls that could leave you with heavy losses… and the 5 coins to consider

IT engineer Petr Chromy is that delighted his crypto investments have soared 100 times in value over the past decade – turning an initial £300 into £30,000.

However, the 32-year-old admits it has been a bumpy ride and taught him that chasing returns on crypto currencies is a gamble that can make you a fortune – but, unless careful, also leave you with huge losses and other devastating consequences. 

Petr says: ‘It’s a real gamble and it’s tempting to get greedy and chase returns – but this can be very risky.’

He first put money into crypto in 2017 – £300 into Bitcoin when it was $5,000 (about £3,700) a coin. It is now trading at close to $90,000 (£67,000). Within a couple of years this initial amount had grown tenfold to about £4,000. 

He then decided to cash half of this money in for a holiday backpacking in Thailand – keeping only about £2,000 in crypto. 

At this point he stopped putting money in Bitcoin and moved about half the £2,000 into Ethereum, the second most popular crypto, to spread the risk.

He was initially attracted to the market because he wanted to understand how it worked – and had felt there was no harm in dabbling with a small amount of money.

But it was only later as he watched this money grow in value to the £30,000 it is worth today, that Petr realised it had become more that a bit of fun – but a nest egg that he now has no intention of selling. 

He adds: ‘Yet I am wary of putting more money into crypto as I think you need to balance risk by also investing in stocks and shares, as well as cash savings. But by the time I retire, I hope this gamble will have paid off – and I will not have to worry about money in old age.’

Petr, from Cambridge, is one of the growing number of crypto buyers who are known as ‘hodlers’. 

This stands for ‘hold on for dear life’. Although nervous about the bumpy helter-skelter journey along the way, so far patience has paid off.

Here’s how to get started – and the lessons that Petr has learned along the way that all crypto buyers could learn from.

What are you buying?

Crypto is a digital currency that is not managed by any central bank or government.

This is part of its key appeal as it cuts out the need for a middleman, such as a bank or payment provider, when making transactions. 

Bitcoin is the most popular crypto, but there are others to consider, including Ethereum, Solano and Cardano. 

No coins or notes exist – they are simply computer files stored in a ‘virtual wallet’ to be saved or spent on goods and services where the technology is accepted. 

A record of all Bitcoins is kept within a ‘blockchain’ – a computer database of encrypted code files that creates a marketplace for traders. 

It is much riskier than the stock market – to be viewed more a gamble than an investment.

How to get started in crypto

For most people, the best way to get hold of crypto such as Bitcoin is via an online trader such as Coinbase, Kraken, eToro or Revolut. 

You do not have to buy single digital coins – you can invest in tiny fractions. You can buy a hundred-millionth of a Bitcoin, known as a Satoshi, currently valued at about 76p, according to Coinbase. 

You must first set up an account with the trading platform. Once you have provided necessary ID, you should be able to use your debit card to buy. 

Be aware that many high street banks, such as Barclays, HSBC and Nationwide, may block you from using credit cards to buy crypto due to the perceived high risk and lack of consumer protection. 

You are not buying physical money but virtual cash with its own unique code. There are only a limited number of goods and services you can spend your cryptocurrencies on, as most shops still view it as a gimmick. 

You can use them to buy software from Microsoft, soaps from shopping chain Lush and even make a donation to charities such as the RNLI. 

If you wish to sell your crypto this is also done through an online trading platform, with a trading fee of typically 1 per cent with websites such as Kraken. 

Because crypto is usually traded in dollars there may also be a currency conversion rate charge of up to 3 per cent. 

Fees vary depending on the platform you use, the amount you are buying and selling, how often you trade, and membership plans. 

Make sure you fully understand them before signing up, and are realistic about how they will be used, so you know what you must pay and how it could affect returns.

Chris Beauchamp, an analyst who studies cryptocurrencies at IG Markets, says: ‘Anyone interested should only drip-feed small amounts of money initially to get a better understanding of what is going on in the cryptocurrency market. 

‘For example, if you are thinking of putting in £500 consider £100 now to scratch that itch – and then wait perhaps a month to see how it has fared. Consider putting in small amounts of money in regularly, such as every month, rather than one big lump sum. 

‘Crypto is not for those of a nervous disposition and in the short-term there are bound to be choppy days. Do not get too obsessed by any volatility otherwise you will become a nervous wreck. If you want to get involved due to a fear of missing out, then you are doing it for the wrong reason.’

Crypto is a gamble – don’t get carried away

Learning about the crypto market has taught Petr valuable lessons – including not to get too greedy as this way you could lose your shirt. 

Petr says: ‘It is not all about the money. Crypto became an unhealthy obsession when I started and I would stay up all night studying markets. I began to go crazy losing sleep and saw an unpleasant side as there are lots of scammers out there just after your cash. It took over my life, and I struggled with personal relationships.

‘But now I treat it as a game of roulette, rather than an investment – and only put in money I can afford to lose without fear of losing out. Always chasing crypto returns only makes you always greedy for more and is not a good way to live.’

In a crisis, crypto can be one of the first places where markets panic. A day after the World Health Organisation officially declared a global pandemic in March 2020, Bitcoin fell from just below $8,000 to $4,850 – almost halving in just a day. 

In this uncertain world it would not take much for another world event to create crypto chaos.

Five cryptos you might consider

Bitcoin is often viewed as the best choice because it is the most established crypto, having been launched in 2009. 

Over the past five years it has increased in value by more than 132 per cent, according to market platform Kraken – turning £29,000 into about £68,000. But there has been plenty of volatility during this time – and it has fallen to lows of £13,000 and highs of more than £92,000. 

Ethereum is another well-established crypto, which was launched in 2015. It has enjoyed returns of 158 per cent in five years, rising from £905 to about £2,299 now.

Other popular digital currencies to consider include Solana, Cardano and XRP – cryptos mentioned by US President Donald Trump for a new US crypto reserve. 

Never invest in a crypto before doing research. You must understand what you are investing in, warns Glen Goodman, author of bestselling book The Crypto Trader. 

Buyers often see the greatest short-term gains in lesser-known cryptocurrencies, which can suddenly shoot up in value when interest grows around them. 

But these are also typically the riskiest because the price can plummet just as quickly, leaving investors with heavy losses. 

For most buyers, the volatility of Bitcoin, Ethereum and other more-established coins is more than risky enough, let alone taking bets on newer, lesser-proven options. 

Petr says: ‘I was enjoying learning about crypto with Bitcoin but then realised that the biggest gains – and risks – could be found in new launches. 

‘My IT background enabled me to understand and get involved in the online chat about new currencies. 

‘In 2021 I came across a new crypto called the Australian Safe Shepherd that was about to launch, and I got in with $400 – and within five minutes it had doubled in value to $800. 

‘This seemed a great time to get out. But had I held on to the stock I could have sold my stake later for $4.5million before the crypto then fell back to earth. 

‘I would certainly not recommend anyone getting involved in a new launch unless they know exactly what they are getting into right at the beginning – otherwise you could get your fingers seriously burned.’ 

Safe Shepherd is now almost worthless, and is valued at just £0.0000000007 – seven ten billionths of a pound – on the platform Coinbase.

Five cryptos never to invest in

So-called ‘meme coins’ that have usually been created as a joke or novelty memento can attract a cult following but should not be treated seriously as an investment.  

Among the most well-known is the Elon Musk-backed Dogecoin. 

This was created as a joke and has the face of a dog called Kabosu on the digital coin. Although it has soared in value over five years by more than 1,400 per cent, it is still worth only  10p. 

It has sunk to being worth as little as 0.005p during this period and had highs of up to 52p. Similar meme coins include Shiba Una and Pepe. 

Trump launched his own meme coin in January last year when he became President, as did his wife Melania. 

Goodman says: ‘Some people made an awful lot of money in the first few minutes of launch, but the vast majority did not. It cast a shadow on the crypto market.’ 

The Official Trump meme coin is down 83 per cent in value since launch to £3.93 while the Melania Meme is down 98 per cent to 10p, according to the trader Kraken. 

You should also avoid crypto promotions offering huge returns, where traders contact you directly via social media – as these are likely to be scams. 

Crypto is an unregulated market and if an offer sounds too good to be true then the chances are it is being offered by crooks.

Alternative ways to get into digital currency

An alternative way to put money into crypto is by using an investment platform, such as Freetrade, to invest in crypto exchange-traded notes (ETNs). This is a type of tracker fund that mirrors the performance of a chosen asset at a low cost. 

Many investors use tracker funds to follow stock markets or the gold price, and a crypto ETN works much the same way, letting you follow a chosen cryptocurrency. 

The FCA lifted a ban on crypto ETNs in October last year, which means they are regulated, so you are more protected than if you hold crypto directly. 

Examples to consider include the WisdomTree Physical Bitcoin ETF, which has a charge of 0.15 per cent. 

Another option is to invest in the shares of firms involved in the industry, such as crypto exchanges or the firms that run the servers that power the whole system. 

There are also funds that can do this by pooling the companies with others, which should hopefully lower the risk than if you just invested in the individual stocks. 

You also avoid the risk of directly investing in any crypto. Examples include iShares Blockchain Technology ETF, which invests in companies such as Coinbase, the microchip maker Nvidia, and the Bitcoin miner Hut. It comes with an annual fund charge of 0.5 per cent a year.

Consider the safety of a crypto wallet

When you buy crypto using a trading website exchange, then the digital currency is usually stored in a personal account held with this trader – which you can access with your own personal code. 

But it is also possible to add another layer of security by putting the crypto into a digital wallet that you can open with a separate digital key code. 

There are two kinds of wallet – a ‘hot’ wallet that is a digital bank that stores your crypto online, and a ‘cold’ wallet that keeps the crypto details in a physical piece of hardware, such as a USB stick or an external hard drive. 

Providers such as Coinbase offer their own ‘hot’ digital wallets where you can transfer digital currencies to or from other accounts. They can be accessed by phone apps for spending or when you want to buy or sell crypto. 

Cryptocurrency blockchains are almost impossible to hack – any weakness in the system is the exchanges where people hold their crypto rather than the digital coin. 

If money is held in a separate digital wallet, it adds a further layer of security. However, lose your password and you are effectively losing the keys to your own safe. 

For those considering a ‘cold’ wallet, there is the cautionary tale of computer engineer James Howells, of Newport in South Wales. 

He lost a hard drive containing 8,000 Bitcoin, accidentally thrown away into a rubbish tip in 2013. Its current value would be more than £600million.

Have you made a tidy sum buying and selling cryptocurrency? Email toby.walne@dailymail.co.uk