What to know about cryptocurrencies and scams?

Confused about cryptocurrencies like bitcoin and Ethereum? You are not alone. Before using or investing in cryptocurrencies, they need to know what makes them different from cash and other payment methods and how to spot cryptocurrency scams or cryptocurrency accounts that may be compromised.

What is a cryptocurrency?

Cryptocurrency, also called virtual currency, is a digital currency that only exists electronically. That means no physical coins or bills unless you use a service that allows you to convert cryptocurrency into a physical token. Typically, you will exchange cryptocurrency online with another person, via your phone or computer, without using an intermediary such as a bank. The best-known cryptocurrencies are Bitcoin and Ether, but there are several different brands, and new cryptocurrency brands are being created all the time.

How do people use cryptocurrencies?

People use cryptocurrencies for quick payments and to avoid transaction fees charged by traditional banks or because they offer some anonymity. Other people might buy and hold cryptocurrency as an investment, hoping it will increase in value.

How can cryptocurrencies be obtained?

You can buy cryptocurrencies through an online exchange platform. Some people can acquire cryptocurrencies through a complex process called "mining" or "mining" for which advanced computer equipment is needed to solve very complicated mathematical problems. 

Where and how are cryptocurrencies stored?

Cryptocurrencies are stored in a digital wallet or wallet, either online, on your computer or on another external physical medium. But if something unexpected happens, for example, if the online platform you use goes out of business, you send cryptocurrency to the wrong person, you lose your digital wallet password, your digital wallet is stolen, or there is a problem with your digital wallet, chances are you find that no one is available to help you recover your funds. And, since cryptocurrencies are usually transferred directly without using an intermediary such as a bank, you will often have no one to turn to if a problem arises.

What are the differences between cryptocurrency and the US dollar?

There are important differences between cryptocurrencies and traditional currencies. Cryptocurrencies are not backed by a government. Cryptocurrency accounts are not insured by a government like US dollars deposited in a bank account are. If you store cryptocurrency in a digital wallet provided by a third-party company, and the company goes out of business or is hacked, the government has no obligation to act to help you get your money back.

The value of a cryptocurrency is constantly changing. The value of a cryptocurrency can change rapidly, even hourly. Its value depends on many factors, including supply and demand. An investment worth thousands of dollars today could be worth only a few hundred dollars tomorrow. And if the value goes down, there is no guarantee that it will go up again.

Cryptocurrency payments

If you are thinking of using a cryptocurrency, know that there are important differences between paying with a cryptocurrency and paying with a credit card or other traditional payment methods: 

Cryptocurrency payments have no legal protections.  Credit and debit cards have legal protections if problems arise. For example, if you need to dispute a purchase, your credit card company has a process to help you get your money back. Cryptocurrencies generally do not have such protection.

Cryptocurrency payments are generally irreversible. Once you pay someone with a cryptocurrency, you can usually only get your money back if the person you paid pays you back. Before you buy anything with cryptocurrencies, find out the reputation and address of the seller and how to contact someone if you run into any problems. Please confirm these details by doing a little research before paying.

Some information about your transactions may be public. People often say that cryptocurrency transactions are anonymous. But the truth is not so simple. Some cryptocurrencies record some transaction details on a public ledger, called a "blockchain." That is a public listing of every cryptocurrency transaction, both from the payer and the recipient of the payment. Depending on the cryptocurrency, the information that is recorded on the blockchain can include details such as the amount of the transaction and the digital wallet addresses of the sender and receiver of the payment. Your digital wallet address is a long string of numbers and letters. Although you can use a fake name to register your digital wallet, it is possible to identify the people involved in a specific transaction using the transaction and wallet information.

How to avoid cryptocurrency scams?

Are you looking for Recover scammed bitcoin and scammed cryptocurrency? Before getting recovered you need to know about how scammers can scam your bitcoin and cryptocurrency:

Scammers are always looking for ways to steal money from you using cryptocurrencies.  A sure sign of a scam is when someone tells you to pay with cryptocurrency. In fact, anyone who tells you to pay with a money transfer, gift card, or cryptocurrency is a scammer. Of course, if you pay in any of those ways, there's almost no way you're going to get that money back. That is the goal of scammers. Here are some of the cryptocurrency scams to watch out for:

Common cryptocurrency scams

Investment scams and business opportunities

·     Some companies promise that you can earn large sums of money in a short period of time and achieve financial independence.

·    Some scammers tell you to pay with cryptocurrency in exchange for the right to recruit other people into a program. They tell you that if you recruit other people, you will get rewards and they will be paid in cryptocurrency. They promise you that the more you pay with cryptocurrencies, the more money you will earn. But these are all false promises and false guarantees.

·      Some scammers start with unsolicited offers from so-called "investment managers." These scammers claim that they can help you multiply your money if you give them the cryptocurrencies you bought. But once you log into the “investment account” that was opened for you, you discover that you cannot withdraw money unless you pay fees.

·     Some scammers send unsolicited job offers to help recruit cryptocurrency investors, sell or mine cryptocurrency, or help convert money to bitcoin.

·       Some scammers post fake jobs on job search websites. They will promise you a job (for a fee), but end up taking your money or personal information.

To spot companies and people to avoid, look for these types of statements: 

·    Scammers guarantee that you will make money. If they promise you that you will make a profit, it is a scam. Even if they have the endorsement or testimony of famous people. (That's something that can be easily faked.)

·    Scammers promise high returns with guaranteed profits. Nobody can guarantee a certain profit, for example, doubling your money. And much less in a short period of time.

·     Scammers promise free money. They will promise it in cash or cryptocurrencies, but the promises of free money are always false.

·    Scammers make big claims without details or explanations. Smart business people want to understand how their investment works and where their money is going. Good investment advisors want to share that information.

Check before you invest. Do an online search by entering the name of the company and the name of the cryptocurrency and add words like “review”, “scam” or “complaint”; if you do the search in Spanish, add words like “comment”, “fraud” or “complaint”. Read other people's opinions. And read more about other common investment scams.

Email blackmail

Scammers often send emails claiming they have embarrassing or compromising photos, videos, or personal information about you. Then, they threaten to make them public unless you pay them with cryptocurrency. Do not do it. This is blackmail and a criminal extortion attempt. Report the incident immediately to the FBI.

Social media scams

If you read a tweet, text, email, or get a message on social media telling you to send cryptocurrency, it's a scam. This is true even if it's a message sent by someone you know or was posted by a celebrity you follow. Your social media accounts may hav