Cryptocurrencies belongs to the digital world, where there is no physical bill or coin because everything is online. Ethereum and Bitcoin are two of the well-known cryptocurrencies; however, new ones continue to be made.
People may use them for payments, use them to gain yield in the DE-FI space (decentralized finance), store of value (Bitcoin) or speculate on a higher value in the future.
Before buying cryptocurrency, keep in mind that it does not have the same safety measures as the traditional banking system. Projects could fail, and if you lose your money there is no way to get it back.
Also keep in mind that scammers will abuse the fact that we are in the starting phase of this financial revolution. Currently there is a lack of knowledge how to use crypto’s in some cases. Before investing/sending your hard earned cash you should review the counterpart. Simply Google it’s name, and check public complaint platform for crypto complaints.
Also learn the basics before starting out in the crypto space:
- Cryptocurrencies vs. U.S Dollars: cryptocurrencies are digital, which is not the only significant difference between traditional currencies like the U.S dollar and cryptocurrencies. Cryptocurrencies are not backed and insured by the government like the U.S bank deposits are. This shows the insecure side of cryptocurrency, unlike the security of the money in any bank account. The money you store in a wallet given by the company gets stolen, the government helps you get your money back.
- Investing in cryptocurrency: before you invest in cryptocurrency, as with any investment, get to know about all the scams and risk factors included. There is no definite guarantee that you will make money, and if anyone promises you some profit, it is likely to be a scam. Just because an investment has a celebrity or is well-known for the endorsements does not mean it is safe or sound. Just as it does for traditional investments, it is known to be true for cryptocurrency.
- Paying with cryptocurrency: before thinking of using cryptocurrency to make a payment, understand the essential differences between paying by traditional methods and paying with cryptocurrency. There is no legal protection when it comes to paying with cryptocurrency. Debit cards and credit cards have a legal protection system in case something goes wrong. For instance, your credit card company has a procedure to get your money back if you need to dispute a purchase. At the same time, cryptocurrency works the opposite because the payment cannot be reversed.
- Cryptocurrency scams: scammers are finding more ways to scam people by viewing people’s increasing interest in cryptocurrency. For instance, scammers can offer business and investment offers by claiming to give you double your investment or some financial freedom. Watch out if anyone:
- gives you the guarantee that you will make money
- assures of bigger payouts doubling your money in a shorter time
- ensures free money in cryptocurrency or dollars
- Claims of a company that is not clear
5. Crypto-jacking: this happens when the scammers use your system or the smartphone’s processing power to mine cryptocurrency for their benefit, that without your permission.
Report the fraud and other suspicious activities that involve other digital assets or cryptocurrency.