I don’t understand cryptocurrency. Are we inventing new money and creating a real monopoly game? Here is a definition of cryptocurrency: a digital currency in which transactions are verified and records maintained by a decentralized system that uses cryptography, rather than a centralized authority.
He went on to say, “Decentralized cryptocurrencies such as bitcoin will now allow the surrender of personal wealth that is beyond restriction and confiscation.” (At this point I’m on the floor in the fetal position crying.)
What happened to the money? Well, for all the kings of the cryptos, May has not been a good month for you, with the value of crypto going down as it has. Instead, he reminded, especially the elderly, to be careful about investing your money, including your retirement, in such an unstable currency.
So what is the attraction?
For fraudsters, there may be good reasons to use cryptocurrencies. Once something is paid with cryptocurrency, it is almost untraceable. Now that retailers are more aware and experienced about gift card fraud, fraudsters are looking for new ways to cheat, and crypto fits the bill.
According to AARP, their Fraud Watch Helpline contacts involving Bitcoin scams have tripled. Their advice is this: If a stranger or company asks you to use cryptocurrency to make a payment or transfer money, assume it’s a scam.
According to Forbes, between January 2021 and March of this year, 46,000 people lost money, totaling over $1 billion, in cryptocurrencies. According to the article, more than half of the victims said the scam started with an ad or social media post. Instagram and Facebook are behind 32% and 26% respectively and involved fake investments. I thought Facebook and Instagram were for seeing pictures of your dinner party or your dog sleeping on your sofa.
Lonely hearts, also known as “romance scams”, have reached $185 million in losses since 2021. Fraudsters who created fake online identities then developed online relationships with vulnerable targets and their defrauded money with scams such as debts to be paid , before they could . leave the country where they were qualified to join the victim and be together.
The article revealed by saying that unlike traditional banks, there is no formal way to report suspicious activity and it is only possible to reverse transactions with a private key that is difficult to acquire. The growing incidence of fraud is leading to renewed interest in stricter regulation.
The FTC highlights three things to remember about crypto:
- Only scammers will guarantee profits or big returns. No cryptocurrency investment is guaranteed to make money, let alone a lot of money.
- No one legitimately will ask you to buy the cryptocurrency. Not to solve a problem or to protect your money. Suspect a scam.
- Never mix online dating and investment advice. If a new love wants to show you how to invest in crypto or asks you to send him crypto, suspect a scam.
Why is cryptocurrency attractive?
According to an Investopedia article, most cryptocurrencies have a limited supply, limited by mathematical algorithms. This makes it impossible for any political or government body to dilute its value through inflation. Furthermore, due to the cryptographic nature of cryptocurrencies, it is impossible for any government agency to tax or confiscate tokens without the cooperation of the owner.
But markets may be dominated by speculative trading, meaning cryptocurrencies may have another month like May again.
So when Matt Damon comes on TV and tells you to invest in Bitcoin because “Fortune smiles on the brave,” follow-up questions should be, “How much Bitcoin did Matt invest in, and did he take cryptocurrency for advertising? or good old dollars? Warren Buffett, meanwhile, is convinced that crypto will “end badly.” I tend to side with Buffett.
For me, a man who has never won a game of Monopoly, I am in no mood to lie awake every night wondering if there is anything left in the piggy bank in the morning.
If you are that person, do your homework.