To clear the confusion about cryptocurrencies as Bitcoin and Ethereum,one has to get into the details of this trendy digital currency before investing in same and also acknowledge the difference of it being different from cash or any other payment method.
The important things to be known of cryptocurrency are to first analyse what exactly cryptocurrency is- It is actually a sort of digital currency which exists electronically. There doesn’t exists any sort of physical coin or bill unless any particular service is being used by the individual to encash it in cryptocurrency for a particular physical token. Generally the cryptocurrency is being exchanged online with some individual, with the help of phone or computer, without using any intermediary as bank. Where Bitcoin and Ether are two most popular cryptocurrency, but there are various other unique brands of crypto, where newer ones are being created regularly.
Use Of Cryptocurrency
Inorder to make faster payments, cryptocurrency is being used by the public,thereby avoiding transaction fees being charged by regular banks or might be it tends to offer certain hidden benefits. While others consider cryptocurrency as investment only.
Way Of Grabbing Cryptocurrency
Cryptocurrency is gained by way of online exchange base, where some of the interested individuals attain cryptocurrency by way of complex procedure as mining, which involves advance computer equipment so as to solve major complex math problems.
Acknowledging The Storage Of Cryptocurrency
Storage of cryptocurrency is done in a digital wallet which could be either on one’s computer or online or even on external hard drive. In case, if anything happens unexpectedly as one’s online exchange platform is out of business, in such a case cryptocurrency is being send to wrong person, also in case password is being lost by an individual to his or her digital wallet or in some cases if an individual’s digital wallet is being stolen then it’s not easy for an individual to come out or recover their funds. Also in case if anyone tends to face any problem then as cryptocurrency is being transferred directly with no middlemen as bank, so no one could help them come out of their problem.
Difference Of Cryptocurrency From U.S. Dollars
First and the foremost difference of cryptocurrency from U.S. Dollars is that it is not supported by a government, as its accounts are not insured by government as U.S. dollars are being put inside a bank account. In case one stores a cryptocurrency with mediator company and the company turns out to be bankrupt and being hacked then in such a case the government is not going help from recovering of lost money.
Secondly, the value of cryptocurrency would aspire to change regularly, even on hourly basis, depending on various factors as supply and demand. Investment which is of thousand dollar value today, may be of worth large amount tomorrow. Simultaneously if the value runs down then one can’t say when it would reverse back.
Payments Made With Cryptocurrency
Payments with cryptocurrency are way too different then the ones made with the aid of credit cards or other traditional ones. Few things which one has to take care off while making payments with cryptocurrency are that legal protections aren’t given to them, while the credit and debit cards come with legal protections. For instance, if a purchase dispute arise then in such a case the credit card company is liable to pay the money back to its user. On the other hand cryptocurrency doesn’t provide any such assurity of pay back.
Furthermore,cryptocurrency payments aren’t reversible and in case one ends up paying with cryptocurrency then money is returned in case the person being paid sends it back. So before indulging in purchase of something with cryptocurrency, one should be aware of the seller’s reputation and about seller’s location as well for further contacting in case some problem arises. Also, last but not the least, information concerning transactions would be public, as some transactions are put on public ledger, referring to as “blockchain”. This is a public list of each cryptocurrency transaction by both payment and receipt side. The blockchain could contain the following information about the sender and receiver wallet address and the amount being transacted.
Ways of Avoiding Cryptocurrency Scams
With every use of cryptocurrency, scammers are there keeping an eye on investor’s money for stealing. One assured sign of a scam is anyone asking for payment by cryptocurrency. Also if anyone is asking payment by gift card or wire transfer then its definitely a scam. The following are few of the cryptocurrency scam:
- Few companies assure that money could be earned in short tenure of time and would attain financial freedom.
- Few of the scammers ask in paying in cryptocurrency so as to recruit others in some program and if you say “yes” to them then they are going to assure you getting the recruitment rewards in cryptocurrency. These are all fake promises and false guarantees.
- Some of the scammers initiate with unsolicited offers from the so assumed investment managers, as they assure you helping your money grow in case they have your entire cryptocurrency with them. But in case of logging in the same investment account which was opened by them, then you are going to be trapped by not being able to withdraw the money unless and until the fees is being paid.
- On the other hand, few other scammers are involved in sending unsolicited job offers, thereby helping in recruiting the cryptocurrency investors, also mining the cryptocurrency, selling cryptocurrency, thereby converting cash to bitcoin.
- Some of the scammers assure to give free money in cash or in cryptocurrency, but free money promises are always fake.
- They also assure you of big payouts with guaranteed returns, which is next to impossible as no one could anyway guarantee a set return, even double your money, that too in short span of time.
Therefore, before investing just be assured, by researching the name of the company online and the cryptocurrency name, in addition to the words as “scam”, “review”, or even complaint. Also invest time in reading other common investment scams.
Scammers could also send emails, which would mention that they have embarrassing photos, videos or even personal information about you. Thereafter threatening you to pay them in cryptocurrency or else they would make those photos public. As this is blackmail so you have to report this as soon as possible to FBI.
Social media scams are another way out for the scammers, for instance with the help of text, tweet, or email. This is very much possible in such cases that even if you know that person or celebrity being followed then their account might be hacked thereof. Therefore, you have to report such scam to social media base and thereafter inform FTC at ReportFraud.ftc.gov.
Reporting Cryptocurrency Scams
There are certain web addresses on which scam could be reported in concern with cryptocurrency:
- The FTC at ReportFraud.ftc.gov
- The commodity Futures Trading Commission (CFTC) at CFTC.gov/complaint
- The U.S. Securities and Exchange Commission (SEC) at sec.gov/tcr
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