Are cryptocurrencies real Cryptocurrency, also called virtual currency or cryptocurrency, is digital money. You can transfer cryptocurrency to someone over the internet without an intermediary, such as a bank. That means there are no physical coins or bills — it’s all online. The best-known cryptocurrencies are Bitcoin and Ether, but new cryptocurrencies continue to be created.
People could use cryptocurrency to make quick payments and avoid transaction fees. Some people might buy cryptocurrency as an investment, hoping it will increase in value. Cryptocurrency is stored in a digital wallet, online, on your computer, or on another physical medium.
Before you buy a cryptocurrency, you need to know that you don’t have the same protections as when you use US dollars. You also need to know that scammers are asking people to pay them in cryptocurrency because they know those payments are usually irreversible.
- Cryptocurrencies versus US dollars
- Are you about to invest in cryptocurrencies?
- How to pay with a cryptocurrency
- cryptocurrency scams
- crypto hacking
- report scams
Cryptocurrencies versus US dollars
The fact that cryptocurrencies are digital is not the only difference between cryptocurrencies and traditional currencies like US dollars.
A government does not back cryptocurrencies.
Store a cryptocurrency in a company-provided digital wallet or wallet, and the company goes out of business or suffers a hack. The government may not be able to act and help you recover the money like it could with the money kept in banks or credit unions. The government does not insure cryptocurrencies like bank deposits in the US. That means that online cryptocurrencies do not have the same protections as money deposited in a bank account.
The value of a cryptocurrency is constantly changing.
The value of a cryptocurrency can change every hour. If the deal goes down, there is no guarantee that it will back up. Speculation that may be worth thousands of dollars today could be priced only hundreds of dollars tomorrow.
Are you about to invest in cryptocurrencies?
As with any other investment, before investing in a cryptocurrency, know the risks and learn how to spot a scam. Here is a slope of some things to watch out for when seeing your options.
No one can guarantee that you will earn money
Anyone who promises you a guaranteed return or dividend is probably a scammer. Just because an investment is well-known or endorsed by a celebrity doesn’t mean it’s a good or safe thing. That goes for both cryptocurrencies and more traditional assets. Don’t invest money you can’t afford to lose.
Not all cryptocurrencies — or companies promoting cryptocurrencies — are created equal
Look at the statements that the companies that are promoting cryptocurrencies are making. Search the internet by entering the name of the company and the cryptocurrency and add words like “review”, “scam”, or “complaint” if you search in Spanish, add words like “comment”, “estafa”, or “queja.”
How to pay with a cryptocurrency
Suppose you are considering using a cryptocurrency to make a payment. Please know that there are significant differences between paying with cryptocurrency and traditional methods.
When you pay with cryptocurrency, you don’t have the same legal protections
If something goes wrong, credit cards and debit cards have legal protections. For example, if you have to dispute a purchase, your credit card company has a process to help you get your money back. Generally, cryptocurrency payments are irreversible. Once you pay with a cryptocurrency, you can only get your money back if the seller sends it back to you.
Before you buy something with cryptocurrency, find out the seller’s reputation and address and how to contact them if there is a problem.