What do you know about cryptocurrency
What is cryptocurrency?
Cryptocurrency is a kind of digital currency that usually exists only in electronic form. Usually you use your phone, computer or a cryptocurrency ATM to buy cryptocurrencies. Bitcoin and ether are well-known cryptocurrencies, but there are many different cryptocurrencies, and new ones are being created.
How do people use cryptocurrency?
People use cryptocurrency for many reasons - fast payments to avoid transaction fees charged by traditional banks, or because they provide some anonymity. Others use cryptocurrency as an investment, hoping that its value will rise.
How to get cryptocurrency?
You can buy cryptocurrencies through an exchange, an application, a website or a cryptocurrency ATM. Some people earn cryptocurrency through a complex process called "mining", which requires advanced computers to solve very complex mathematical puzzles.
Where and how can you store cryptocurrency?
The cryptocurrency is stored in a digital wallet, which can be online, on your computer or on an external hard drive. A digital wallet contains a wallet address, which is usually a long string of numbers and letters. If something happens to your wallet or your cryptocurrency funds - for example, the online exchange platform stops working, sending cryptocurrency to the wrong person, losing the password to your digital wallet, or your digital wallet is stolen or hacked - you will probably find that no one can intervene to help you get your money back. money.
How does cryptocurrency differ from the US dollar?
Since cryptocurrency only exists online, there are important differences between cryptocurrency and a traditional currency such as the US dollar.
- Cryptocurrency accounts are not supported by the government. The cryptocurrency stored in the accounts is not insured by the government, like US dollars deposited in an FDIC-insured bank account. If something happens to your account or cryptocurrency funds — for example, the company providing a place to store your wallet stops working or is hacked — the government is not obligated to intervene and help get your money back.
- The values of cryptocurrencies are constantly changing. The value of cryptocurrency can change quickly, even changing by the hour. And the volume of changes can be significant. It depends on many factors, including supply and demand. Cryptocurrencies tend to be more volatile than traditional investments such as stocks and bonds. An investment worth thousands of dollars today may cost only hundreds tomorrow. And if the value decreases, there is no guarantee that it will grow again.
Pay with cryptocurrency?
- Payments in cryptocurrency have no legal protection. Credit and debit cards have legal protection if something goes wrong. For example, if you need to dispute a purchase, the company issuing your credit card has a procedure that will help you get your money back. Cryptocurrencies usually don't have any such protection.
- Payments in cryptocurrency are usually irreversible. After you have paid with cryptocurrency, you can usually get your money back only if the person you paid sent it back. Before buying anything with cryptocurrency, find out the seller's reputation by doing some research before paying.
- It is likely that some information about your transactions will become publicly available. People talk about cryptocurrency transactions as anonymous. But the truth is not so simple. Cryptocurrency transactions are usually registered in a public registry called "blockchain". This is a general list of each cryptocurrency transaction - both on the payment side and on the receiving side. Depending on the blockchain, the information added to the blockchain may include details such as the transaction amount, as well as the addresses of the sender's and recipient's wallets. Sometimes you can use transaction and wallet information to identify people involved in a particular transaction. When you buy something from a seller who collects other information about you, such as a shipping address, this information can also be used to identify you later.
How to Avoid Cryptocurrency Fraud
Scammers are always finding new ways to steal your money using cryptocurrency. To stay away from crypto scammers, here are some things to know.
- Scammers request payment only in cryptocurrency. No legitimate business will ask you to send cryptocurrency in advance - not to buy something, not to protect your money. It's always a scam.
- Only scammers will guarantee profits or big refunds. Do not trust people who promise that you will be able to earn money quickly and easily on the crypto markets.
- Never confuse online dating and investment advice. If you met someone on a dating site or in an application, and he wants to show you how to invest in cryptocurrency, or asks you to send him a cryptocurrency, then this is a scam.
Cryptocurrency-related Fraud
Scammers use several proven methods of fraud - only now they require payment in cryptocurrency. Investment scams are one of the best ways that scammers trick you into buying cryptocurrencies and sending them to scammers. But scammers also pose as businesses, government agencies, and love interests, among other tactics.
Investment scams
Investment scams often promise that you can "make a lot of money" "without risk," and they often start on social networks or apps or online dating sites. Of course, these fraudulent activities can also start with an unexpected text message, email, or call. And in the case of investment fraud, cryptography is of fundamental importance in two ways: it can be an investment and a payment.
Here are some common investment scams and ways to identify them.
- Suddenly, a so-called "investment manager" calls you. They promise to multiply your money - but only if you buy a cryptocurrency and transfer it to their online accounts. The investment website they direct you to looks real, but it's actually fake, just like their promises. If you are logged into your "investment account", you will not be able to withdraw your money at all or only if you pay high fees.
- A scammer impersonates a celebrity who can double any cryptocurrency you send them. But celebrities don't contact you through social media. He's a joker. And if you click on an unexpected link that they send, or send cryptocurrency to the so-called QR code of a celebrity, then this money will go directly to the fraudster and disappear.
- An online "love interest" wants to send money or cryptocurrency to help you invest. This is a scam. As soon as someone asks you to meet them on a dating site for money or in an application or offers you investment advice, know: this is a fraudster. Tips and suggestions that will help you invest in cryptocurrency are nothing but a scam. If you send them cryptocurrency or money of any kind, they will disappear and you usually won't get them back
- Scammers guarantee that you will earn money, or promise large payouts with a guaranteed refund. No one can provide these guarantees. Much less in a short time. And there is nothing "low-risk" about investing in cryptocurrency. So: if a company or a person promises that you will make a profit, then this is a scam. Even if there is the approval of celebrities or reviews of happy investors. They are easy to fake.
- Scammers promise free money. They will promise free cash or cryptocurrencies, but free financial promises are almost always fake.
- Scammers make big claims without details or explanations. Regardless of the investment, find out how it works and ask questions about where your money is going. Honest investment managers or consultants are ready to share this information and back it up with details.
Before investing in cryptocurrency, search the Internet for the name of the company or person and the name of the cryptocurrency, as well as words such as "review", "fraud" or "complaint"."Look at what others are saying. And learn more about other common investment scams.
Imitators of business, government and career
In a commercial or government scam or when applying for a job, a fraudster pretends to be someone you trust in order to convince you to send him money by buying and sending cryptocurrency.
- Scammers pose as well-known companies. They come in waves, and scammers can say that they are from Amazon, Microsoft, FedEx, your bank or many others. They will send text messages, make calls, send emails, send social media messages — or perhaps they will post a pop-up alert on your computer. They may say that there is fraud on your account or your money is in danger - and to fix it, you need to buy a cryptocurrency and send it to them. But this is a scam. If you click on the link in any message, answer the call or call back the number in the pop-up window, you will be connected to the fraudster.
- Scammers pose as new or existing companies offering fraudulent cryptocurrencies or codes. They will say that the company enters the crypto world by issuing its own coin or token. They can create social media ads, news articles, or a great website to support everything and trick people into buying. But these cryptocurrencies and tokens are a scam that ultimately steals money from the people who buy them. Do an internet search to find out if the company has issued a coin or token. This will be widely covered in reputable media if it is true.
- Fraudsters pose as government agencies, law enforcement agencies or utility companies. They may say that there is a legal problem, that you owe money or that your accounts or benefits are frozen as part of the investigation. They tell you to solve the problem or protect your money by buying cryptocurrency. They may ask you to send them to the wallet address you specified - for "safety". Some scammers even stay in touch with you because they direct you to an ATM with cryptocurrency and give step-by-step instructions on how to insert money and convert it into cryptocurrency. They will ask you to send the encryption by scanning a QR code that they will provide you with, which will redirect the payment directly to their digital wallet, and then it will disappear.
- Scammers post fake jobs on job sites. They may even send unsolicited cryptocurrency-related job offers, such as jobs that help hire investors, sell or mine cryptocurrencies, or help convert cash into cryptocurrencies. But these so-called "jobs" start only if you pay a commission in cryptocurrency. Which is always a scam, every time. As your first assignment in your "job", these scammers send you a check to deposit into your bank account. (This check will turn out to be fake.) They will tell you to withdraw some of these funds, buy cryptocurrency for a fictional "client" and send it to the crypto account they offer you. But if you do, the money will disappear and you will be on the hook to get that money back to your bank.
To avoid impostors in business, government and at work, know this
- No legitimate company or government will send you an email, text message, or social media message asking for money. And they won't ask you to buy or pay with cryptocurrency.
- Never click on a link from an unexpected text message, email, or social media post, even if it seems that it came from a company you know.
- Do not pay anyone who calls you unexpectedly, demanding payment using cryptocurrency.
- Never pay a fee to get a job. If someone asks you to pay in advance for a job or order a cryptocurrency as part of your job, then this is a scam.
Extortion Fraud
Scammers may send emails or US mail to your home, informing you that they have embarrassing or compromising photos, videos, or personal information about you. Then they threaten to make them public only if you pay them in cryptocurrency. Don't do that. This is extortion and attempted criminal extortion. Notify the FBI immediately.
How to Report Cryptocurrency Fraud
Report fraud and other suspicious activities related to cryptocurrency in order to
- The Federal Trade Commission in ReportFraud.ftc.gov
- Commodity Futures Trading Commission (CFTC) in CFTC.gov/complaint
- The U.S. Securities and Exchange Commission (SEC) in sec.gov/tcr
- Internet Crime Complaint Center (IC3) in ic3.gov/Home/FileComplaint
- The cryptocurrency exchange company that you used to send money to