Cryptocurrency is a form of digital currency that exists only on the internet. Unless you utilize a service that allows you to exchange cryptocurrencies for a physical token, there is no actual coin or bill. Are you perplexed by cryptocurrencies such as bitcoin and Ethereum? You’re not the only one who feels this way. It is best to understand how it differs from other methods, as well as how to avoid cryptocurrency scams before you make an investment.
How is cryptocurrency different?
Unlike fiat currencies and other investment options, cryptocurrency accounts are not guaranteed by the government. This means, if you keep bitcoin with a third-party firm and it goes out of business or is hacked, you are not going to get any help or assistance from the government to get your investment back.
Another major factor that is also important to note with cryptocurrencies is that their value can fluctuate dramatically, even hourly. Many variables influence this, including supply and demand. A thousand-dollar investment now might be worth only a few hundred dollars tomorrow. And there’s no assurance that the value will rise again if it falls. One factor that had driven the popularity of cryptocurrencies and Bitcoin, in particular, is that it is built on blockchain technology which is considered to be extremely safe. This also minimizes the risk of your Bitcoin getting stolen.
Unfortunately, even the robust security that blockchain technology offers is not enough to keep cyber criminals at bay. In fact, cyber criminals are always coming up with new ways to take your bitcoin. Anyone who insists on paying in bitcoin is a definite indicator of a scam. For instance, someone who suggests paying via wire transfer, gift card, or bitcoin is a con artist. Another popular method adopted by cyber criminals is by making unsolicited pitches that appear to be from legitimate “investment managers.” These cyber criminals claim that if you give them the bitcoin you purchased, they can help you increase your money. However, after you go into the “investment account” they set up for you, you’ll discover that you can’t withdraw your funds until you pay a certain amount in vague fees.
One of the tell-tale signs of a scam is if they guarantee that you are going to make a lot of money if you invest your Bitcoin. New investors are advised to watch out for any of these scams when they are investing in Bitcoin.
Bitcoin Transactions Aren’t Completely Anonymous
This will come to many as a surprise, but Bitcoin transactions aren’t all anonymous. For example, it is not unheard of for cryptocurrencies to use a public ledger called a “blockchain” to record transaction information. This is a public record of all bitcoin transactions, including both the payment and reception sides. This means personal data such as transaction value and the wallet’s address of the sender and recipient may be published on the blockchain. This could be used to identify the names of the people involved in the transaction. However, instances of data theft such as this have not been reported as of late. This is mainly because technologies and security features have gotten better and more secure. The growing interest in Bitcoin trading is going to further drive better security and other safety features for investors.
If you are new to Bitcoin investing, then the chesworkshop is a great platform that comes with all of the resources one could need for investing in Bitcoin. Whether you are a first-timer or an experienced Bitcoin investor, the app offers real-time updates and the latest market trends to help Bitcoin investors make a more informed decision.