# Things You Should Know About Cryptocurrency and Scams Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2021-05-21 Category: BUSINESS Category URL: https://financedigest.com/category/business Meta Title: Cryptocurrency Investing: Ethereum or Bitcoin? Meta Description: Confused about Bitcoin and Ethereum? Learn about cryptocurrencies, digital wallets, and the differences from traditional currency before investing. Discover URL: https://financedigest.com/things-you-should-know-about-cryptocurrency-and-scamshtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/cryptocurrency-and-1736838316329-compressed.jpg) Do you want to invest in crypto but confuse about Ethereum and Bitcoin? You don’t need to worry as you are not the only one. It is important to understand cryptocurrencies before investing and what makes them different from traditional currencies. **What is Cryptocurrency?** Cryptocurrency is a digital currency that you cannot [hold physically](https://www.financedigest.com/why-it-pays-for-companies-to-hold-physical-assets-in-separate-limited-companies.html "Why it pays for companies to hold physical assets in separate limited companies"). It only exists electronically unless it allows you to cash. [Crypto can only be exchanged](https://www.financedigest.com/analysis-crypto-exchanges-wont-bar-russians-raising-fears-of-sanctions-backdoor.html "Analysis-Crypto exchanges won’t bar Russians, raising fears of sanctions backdoor") online using a computer or phone. Furthermore, it does not involve any intermediary in the process. Most people are familiar with Bitcoin but there are many others available too. People can use this [currency to make quick transactions and can avoid bank](https://www.financedigest.com/will-central-bank-digital-currencies-deliver-a-more-democratic-payment-industry.html "Will Central Bank Digital Currencies deliver a more democratic payment industry?") fees. Some people use it to [buy things](https://www.financedigest.com/4-things-to-consider-before-buying-your-dream-car.html "4 Things To Consider Before Buying Your Dream Car") while others hold currency so they can sell when the value goes up. You can easily buy crypto from an online exchange. You can also [earn crypto](https://www.financedigest.com/how-to-earn-crypto-using-twitch.html "How to earn crypto using Twitch") with a process called “mining” which requires a powerful computer to solve complicated math puzzles. **Where You Can Store Crypto?** After buying crypto, you need to keep it somewhere. As it is a digital asset, so you have to [store it online](https://www.financedigest.com/the-benefits-of-developing-online-stores-through-shopify.html "The Benefits of Developing Online Stores Through Shopify") in a digital wallet or on an external hard drive. In [case the exchange goes out of business](https://www.financedigest.com/building-a-business-case-for-integrated-payments.html "Building a Business Case for Integrated Payments"), you lost the password, or send crypto to scammers, then there will be no one to help you. The reason is that [transactions of digital currencies do not involve any bank](https://www.financedigest.com/igtb-launch-digital-transaction-banking-available-as-saas.html "iGTB launch Digital Transaction Banking available as SaaS"), which means there is no one to help you out. **What Makes it Different** Key differences between cryptocurrency and traditional currency are as follows: - First of all, you [need to keep in mind that no government is a guarantor of cryptocurrency](https://www.financedigest.com/how-much-do-you-need-to-know-about-the-atos-cryptocurrency-letter.html "How much do you need to know about the ATO’s Cryptocurrency Letter?"). Traditional currencies such as the U.S dollar backed by the government of the United States of America. You have to [buy it from third-party companies and if they go out of business then there will be no government to help get your money back](https://www.financedigest.com/mercedes-benz-to-buy-back-up-to-4-billion-euros-in-shares-by-2025.html "Mercedes-Benz to buy back up to 4 billion euros in shares by 2025"). - Compared to traditional currencies, the rate of crypto [changes rapidly](https://www.financedigest.com/rapidly-changing-fashion-lifestyle-is-expected-to-spur-demand-for-clothes-closets-market.html "Rapidly Changing Fashion Lifestyle Is Expected To Spur Demand For Clothes Closets Market"). Change of price with [traditional](https://www.financedigest.com/insurers-must-reimagine-traditional-risk-models-to-adapt-to-climate-change.html "Insurers Must Reimagine Traditional Risk Models to Adapt to Climate Change ") currencies usually happens in a day but this change is very small. However, with [digital currency](https://www.financedigest.com/minding-the-gap-the-importance-of-inclusive-financial-strategies-as-digital-currencies-rise.html "Minding The Gap: The importance of inclusive financial strategies as digital currencies rise "), the price can drastically increase or decrease by the hour. [**Payment Method**](https://www.financedigest.com/freelancer-payments-methods-what-you-should-know.html "Freelancer Payments Methods: What You Should Know") You must be wondering that it is a currency which means you can use it as a payment method. Yeah! But it is not like any other traditional method. - As we explained earlier that cryptocurrencies do not have legal protection like credit or [debit cards](https://www.financedigest.com/visa-has-terminated-global-debit-card-agreements-with-ftx.html "Visa has terminated global debit card agreements with FTX"). For example, if you want to open a dispute on a purchase, then the [credit card](https://www.financedigest.com/more-businesses-investing-in-assets-like-virtual-credit-cards.html "More Businesses Investing In Assets Like Virtual Credit Cards") company will help you get money back which is not the case with crypto. - If something goes wrong with your transactions, then the amount will reverse in your account. But cryptocurrency transactions are non-reversible. So, it is essential to do your research to find a [best trading app](https://vantagepointtrading.com/compare/best-trading-app/). You cannot get it back unless the recipient sends it back. So, it is important to make sure that the seller is trustable. - Most [people think](https://www.financedigest.com/over-a-third-of-uk-people-think-thomas-whitmore-from-independence-day-will-be-joined-by-donald-trump-in-disneys-hall-of-presidents.html "Over a third of UK people think Thomas Whitmore from Independence Day will be joined by Donald Trump in Disney’s Hall of Presidents") that crypto transactions are anonymous. But it is not true with some [cryptos like Bitcoin](https://www.financedigest.com/low-carbon-bitcoin-crypto-miners-green-power-talk-angers-texas-locals.html "Low-carbon bitcoin? Crypto miners’ green power talk angers Texas locals"). Cryptocurrencies record [transaction](https://www.financedigest.com/rambus-unveils-vaultify-trade-for-secure-transaction-and-storage-of-crypto-assets-on-blockchain.html "Rambus Unveils Vaultify Trade for Secure Transaction and Storage of Crypto Assets on Blockchain") details on a “blockchain”. It means that everyone can access and see the payment and receipt details. Some [currencies also include details like wallet](https://www.financedigest.com/experiences-new-currency-capturing-hearts-wallets-consumers.html "Experiences are the new currency for capturing the hearts (and wallets) of consumers") addresses of senders and receivers and the transaction amount. So, if someone wants to trace then they can easily identify you using these details. **Tips to Avoid** [Crypto Scams](https://www.financedigest.com/natwest-limits-customers-crypto-transfers-citing-scam-concerns.html "NatWest limits customers’ crypto transfers, citing scam concerns") More people are taking an interest to [invest in cryptocurrency](https://www.financedigest.com/7-reasons-why-you-should-invest-in-cryptocurrency.html "7 Reasons why you should invest in Cryptocurrency"). It also means that there will be scammers that will try to steal your money. If someone is asking you to pay only by crypto then it is a clear [sign of a scam](https://www.financedigest.com/10-signs-of-loan-scams.html "10 Signs Of Loan Scams"). Because they know that once you send them the money, there is no way to get it back. - There are scammers out there who [claim to pay](https://www.financedigest.com/cvs-walmart-walgreens-agree-to-pay-13-8-billion-to-settle-u-s-opioid-claims-sources.html "CVS, Walmart, Walgreens agree to pay .8 billion to settle U.S. opioid claims – sources") you in cryptocurrency. They will [say that you can earn by paying](https://www.financedigest.com/growth-will-pay-for-uk-government-spending-plans-minister-says.html "Growth will pay for UK government spending plans, minister says") them more. They will make fake promises to get more money out of your pocket. - Some scammers will send you job offer to recruit [crypto investors](https://www.financedigest.com/dollar-catches-breath-while-investors-await-midterms-cryptos-skittish.html "Dollar catches breath while investors await midterms; cryptos skittish"), and miners so they can help them convert cash to bitcoin. Before you invest with a [crypto exchange](https://www.financedigest.com/verasity-vra-lists-on-tier-1-cryptocurrency-exchange-crypto-com.html "Verasity $VRA Lists on Tier-1 Cryptocurrency Exchange Crypto.com") or seller on the internet. It is [essential to do your research](https://www.financedigest.com/3-essential-types-of-stock-research-tools.html "3 Essential Types of Stock Research Tools") and read online reviews. **This is Sponsored Feature** --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---