The world is ever-changing and how we pay for goods and services is quickly evolving as well.
Remember the days when we paid for everything with cash, a check, or a credit or debit card? Now, there is another option called cryptocurrency. According to NerdWallet, “Cryptocurrency is a form of payment that can be exchanged online for goods and services. Many companies have issued their own currencies, often called tokens, and these can be traded specifically for the good or service that the company provides. Think of them as you would arcade tokens or casino chips. You’ll need to exchange real currency for the cryptocurrency to access the good or service.”
Ahhh, arcade tokens. I think I can somewhat understand this.
The Federal Trade Commission (FTC) says you can transfer cryptocurrency to someone online without a go-between, like a bank. People often use them for quick payments and to avoid transaction fees.
You can buy cryptocurrency with a credit card or, in some cases, get it through a process called “mining.” Cryptocurrency is stored in a digital wallet, either online, on your computer, or on other hardware.
Some people might get cryptocurrencies as an investment, hoping the value goes up, but as with almost anything these days, be aware of “bad actors”. The FTC says scammers ask people to pay with cryptocurrency because they know that such payments are typically not reversible.
Cryptocurrencies are digital, but that is not the only difference between cryptocurrencies and traditional currencies like U.S. dollars. Here are a few important facts the FTC says you should keep in mind.
Cryptocurrencies aren’t backed by a government.
Cryptocurrencies are not insured by the government like U.S. bank deposits are. This means that cryptocurrency stored online does not have the same protections as money in a bank account. If you store your cryptocurrency in a digital wallet provided by a company, and the company goes out of business or is hacked, the government may not be able to step and help get your money back as it would with money stored in banks or credit unions.
A cryptocurrency’s value changes constantly.
A cryptocurrency’s value can change by the hour. An investment that may be worth thousands of U.S. dollars today might be worth only hundreds tomorrow. If the value goes down, there’s no guarantee that it will go up again.
You should know that not all cryptocurrencies — or companies promoting cryptocurrency — are the same. Look into the claims that companies promoting cryptocurrency are making. Search online for the name of the company, the cryptocurrency name, plus words like “review,” “scam,” or “complaint.”
If cryptocurrency interests you, do your research. The Federal Trade Commission provides a wealth of information on using cryptocurrency for payment, cryptocurrency scams, and investing to help you make good solid decisions.
