Cryptocurrency is an exciting, new phenomenon in the twenty-first century. With high profile people singing its praises, many people want to experience the world of crypto trading and Bitcoin for themselves. Sadly, many people jump into it, having done zero research, and fall victim to the pitfalls of dealing with cryptocurrency. For those who have no experience with crypto, but want to try it, we hope this article will clarify a few of the dangers associated with cryptocurrency and help you to avoid them if you ever choose to dip your toe into the world.
How to Use Cryptocurrency
Cryptocurrency can be bought through a plethora of online trading platforms and through a process called “mining”, wherein a person solves a series of complicated puzzles for a reward. Cryptocurrency is used to make small payments and avoid transaction fees, as digital currency is not associated with banks or governments. Most people who purchase cryptocurrency, however, buy it in hopes that it will increase in value over time.
What to Consider
The primary consideration when it comes to cryptocurrency is its lack of physical form. Cryptocurrency is a digital currency, which means it has to be stored in a so-called “digital wallet”, i.e. an electronic device or an external hard drive. This means that if your “digital wallet” is in any way compromised you will lose all of your funds and will likely have no way of getting them back.
Another consideration to be had is the lack of legal protections when making payments with cryptocurrency. Unlike most debit and credit cards, which offer an opportunity to dispute a purchase if something goes wrong, the same is not possible when making purchases with cryptocurrency. This creates problems if, for example, you’ve made a payment using crypto for a product that never arrived. The best way to mitigate this is to do your research on the person or company you are purchasing products from.
To learn more about mitigating the dangers of cryptocurrency, read more into the different crypto trading apps, that offer a number of safety tips for beginners, as well as take the utmost security measures.
Scams Associated with Cryptocurrency
Unfortunately, as with every other facet of life, the cryptocurrency world also has to deal with scams. Over the small amount of time that cryptocurrency has been relevant, scammers have found ways to exploit and cheat unsuspecting people trying out the new phenomena. One way to tell whether something is a scam is if the seller demands payment through cryptocurrency. Once the payment has been made there is, of course, no way to get the money back, and you likely will have no one to contact, as cryptocurrency is not recognized as legal tender.
Crypto pyramid schemes, where you are promised a certain sum based on the number of people you recruit into the company are another popular online scam. Often they will claim that the more you pay, the higher the profit, but most times these are empty promises.
Another common scam is the creation of fake cryptocurrency apps. Although stakeholders in companies like the Google App store and the Apple App store work hard to remove any suspicious apps, many of them still find themselves on somebody’s electronic device. The risk here is greater for Android users, but everyone can fall for it. The best way to avoid this is to just be vigilant when, and look out for any suspicious apps when downloading crypto trading apps or visiting crypto trading websites.
These are just a few of the things you should consider when starting out with crypto trading. The best way to mitigate these problems is to be diligent when researching a website and familiarize yourself with the types of online crypto-related scams that permeate the internet.