Understanding Cryptocurrency

Virtual Ponzi schemes:

Cryptocurrency criminals promote non-existent opportunities to invest in digital currencies and create the illusion of huge returns by paying off old investors with new investors money.

“Celebrity” endorsements:

They usually use messaging apps or chat rooms to start rumours that a famous business person is backing a specific cryptocurrency. Once they have encouraged investors to buy and driven up the price, the scammers sell their stake, and the currency greatly reduces in value.

Romance scams:

The FBI warns of a trend in online dating scams, where tricksters persuade people they meet on dating apps or social media to invest or trade in virtual currencies. The FBI’s Internet Crime Complaint Centre fielded more than 1,800 reports of crypto-focused romance scams in the first seven months of 2021, with losses reaching $133 million.

Read : The Worst Crypto in History

PROS and CONS of Cryptocurrency

Pros :

• New, decentralized paradigm for money. In this system, cryptocurrencies eliminates the possibility of a single point of failure. centralized intermediaries, such as banks and monetary institutions, are not necessary to enforce trust and police transactions between two parties.
• Easier to transfer funds directly between two parties, without the need for a trusted third party like a bank or a credit card company. Such decentralized transfers are secured by the use of public keys and private keys and different forms of incentive systems, such as proof of work or proof of stake.
• Transfers between two transacting parties are faster compared to standard money transfers.

Cons :

• Though they claim to be an anonymous form of transaction, cryptocurrencies are actually pseudonymous. They leave a digital trail that agencies such as the Federal Bureau of Investigation (FBI) can decipher. This opens up possibilities of governments or federal authorities tracking the financial transactions of ordinary citizens.
• Cryptocurrencies have become a popular tool with criminals for nefarious activities.
• Though cryptocurrency blockchains are highly secure, other crypto repositories, such as exchanges and wallets, can be hacked. Many cryptocurrency exchanges and wallets have been hacked over the years, sometimes resulting in millions of dollars worth of “coins” stolen.