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Things You Should Know About Cryptocurrency and Scams

Things You Should Know About Cryptocurrency and Scams

Do you want to invest in crypto but confuse about Ethereum and Bitcoin? You don’t need to worry as you are not the only one. It is important to understand cryptocurrencies before investing and what makes them different from traditional currencies.

What is Cryptocurrency?

Cryptocurrency is a digital currency that you cannot hold physically. It only exists electronically unless it allows you to cash. Crypto can only be exchanged online using a computer or phone. Furthermore, it does not involve any intermediary in the process. Most people are familiar with Bitcoin but there are many others available too.

People can use this currency to make quick transactions and can avoid bank fees. Some people use it to buy things while others hold currency so they can sell when the value goes up. You can easily buy crypto from an online exchange. You can also earn crypto with a process called “mining” which requires a powerful computer to solve complicated math puzzles.

Where You Can Store Crypto?

After buying crypto, you need to keep it somewhere. As it is a digital asset, so you have to store it online in a digital wallet or on an external hard drive. In case the exchange goes out of business, you lost the password, or send crypto to scammers, then there will be no one to help you. The reason is that transactions of digital currencies do not involve any bank, which means there is no one to help you out.

What Makes it Different

Key differences between cryptocurrency and traditional currency are as follows:

  • First of all, you need to keep in mind that no government is a guarantor of cryptocurrency. Traditional currencies such as the U.S dollar backed by the government of the United States of America. You have to buy it from third-party companies and if they go out of business then there will be no government to help get your money back.
  • Compared to traditional currencies, the rate of crypto changes rapidly. Change of price with traditional currencies usually happens in a day but this change is very small. However, with digital currency, the price can drastically increase or decrease by the hour.

Payment Method

You must be wondering that it is a currency which means you can use it as a payment method. Yeah! But it is not like any other traditional method.

  • As we explained earlier that cryptocurrencies do not have legal protection like credit or debit cards. For example, if you want to open a dispute on a purchase, then the credit card company will help you get money back which is not the case with crypto.
  • If something goes wrong with your transactions, then the amount will reverse in your account. But cryptocurrency transactions are non-reversible. So, it is essential to do your research to find a best trading app. You cannot get it back unless the recipient sends it back. So, it is important to make sure that the seller is trustable.
  • Most people think that crypto transactions are anonymous. But it is not true with some cryptos like Bitcoin. Cryptocurrencies record transaction details on a “blockchain”. It means that everyone can access and see the payment and receipt details. Some currencies also include details like wallet addresses of senders and receivers and the transaction amount. So, if someone wants to trace then they can easily identify you using these details.

Tips to Avoid Crypto Scams

More people are taking an interest to invest in cryptocurrency. It also means that there will be scammers that will try to steal your money. If someone is asking you to pay only by crypto then it is a clear sign of a scam. Because they know that once you send them the money, there is no way to get it back.

  • There are scammers out there who claim to pay you in cryptocurrency. They will say that you can earn by paying them more. They will make fake promises to get more money out of your pocket.
  • Some scammers will send you job offer to recruit crypto investors, and miners so they can help them convert cash to bitcoin.

Before you invest with a crypto exchange or seller on the internet. It is essential to do your research and read online reviews.

 

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