What?
Cryptocurrency is an asset that lives on a blockchain and treated as digital currency. It can be used to pay for transactions or traded, this exchange will be recorded down on the blockchain.
Examples of Cryptocurrencies
- Bitcoin
- Ethereum
- Stablecoin
How it works:
- Mining – Miners are required to solve certain mathematical puzzles over specially equipped computer systems to be rewarded with bitcoins in exchange.
- Buying, trading and storing – Users today can buy cryptocurrencies from central exchanges, brokers, and individual currency owners or sell it to them.
- Once bought, cryptocurrencies can be stored in digital wallets. Digital wallets can be “hot” or “cold”. Hot means the wallet is connected to the internet, which makes it easy to transact, but vulnerable to thefts and frauds. Cold storage, on the other hand, is safer but makes it harder to transact.
- Transacting and investing – Cryptocurrencies such as Bitcoins can easily be transferred from one digital wallet to another by using only a smartphone. Once you own them, you can either choose to:
- Use them to buy goods or services
- Trade them
- Exchange them for cash
Protect Your Money and Avoid Investment Scams.
According to the North American Securities Administrators Association (NASAA), investments that are related to cryptocurrencies and digital assets is the top threat to investors in 2021. Due to this issue, investors are urged to practice the following tips to identify and avoid investment scams:
- Anyone can be anyone on the Internet
- To ensure investors do not accidently deal with an imposter firm, pay careful attention to domain names and learn more about how to protect your online accounts.
- Beware of fake client reviews.
- Scammers often publish positive yet misleading reviews to deceive new investors to create an appearance of a reliable promoter.
- If it sounds too good to be true, it probably is.
- Safe and profitable returns over a relatively short term are often red flags for fraud, as potential profits are correlated with the degree of risk.