In simple terms, Cryptocurrency can be described as digital money. With the changes being experienced in the digital market through technology and the internet, digital money is becoming an option. Cryptocurrency in the market started as a rumor but now its among the most embraced deal across the world. The value of bitcoins against the dollar and other currencies has gained momentum over the years. Corporations and governments are even adopting the financial line for their internal needs.
Cryptocurrency in the United States of America
Cryptocurrency is the USA is gaining more popularity than any other state or country in the world. Not only does its advent originate from the continent, but also its acceptable. With it serving as an alternative to normal currency and having a higher value to the dollar, the appreciation cannot be understated.
Regulation of Cryptocurrency
Despite its appreciation in the digital market, bitcoins and cryptocurrency isn’t legal in many states. The legal approach to cryptocurrency in the United States is still proving hard to find. The laws governing its trade and exchange vary with the state. The federal authorities still have a say in the governance hence making it hard to have a direct approach. Such authorities as FinCEN (The Financial Crimes Enforcement Network) and IRS (Internal Revenue Service) have varying notions and approach to cryptocurrency. Whereas IRS sees cryptocurrency as being legal, FinCEN has question marks about its legality.
The legal territories that have been segregated with the progress of digital currency. This has made it tricky for Americans to get the best from the idea. Such States as Alabama, Georgia, Alaska, Arizona and Connecticut seem to have a strong stance on why cryptocurrency is a good fit for the Americans. However, such states as Florida, Arkansas, Idaho and Indiana doesn’t see it fit to pass legislation with regard to cryptocurrency. This has also been seen in other countries and states across the world.
But why is the world and especially the United State of America have varying legal stances on digital currencies? The answer is the increasing cases of “Bitcoin and Cryptocurrency scams”.
Cryptocurrencies Vs U.S. Dollars
Cryptocurrencies not only differ from the Dollar with the fact that they are digital. There are other major differences.
- Government Backing
Cryptocurrencies like Bitcoin are not backed by the government. This means that they are not insured by the government like U.S. bank deposits are.
Cryptocurrency stored online therefore, does not have the same protection as money in a bank account.
In any case a company you store your cryptocurrency goes out of business or is hacked, the government is not in a position to help you recover the money as in the case of money stored in banks.
- Constant Value Changes
Cryptocurrency’s value changes over and over within a short time. It means that an investment worth thousands of U.S. dollars today might be worth only hundreds the next day.
Bitcoin and Cryptocurrency Scams in USA
One of the main reason bitcoins and cryptocurrency hasn’t been appreciated much in the USA is the increasing cases of fraud and scams. As much as it is a form of currency, you don’t get to touch or feel its worth. You measure it worth through the conversion made against the dollar. Digital transactions have posed a lot of challenges. Digital currency especially bitcoins are no exceptions.
In the recent past, authorities within the United States have raised concern on the increasing cases of people being frauded and scammed of their hard-earned income through bitcoin exchange and conversions.
Common Forms of Cryptocurrency Scams
- Bitcoin Exchange Scams
Most cryptocurrencies are bought and sold at exchanges. The fact that there are no regulatory bodies to oversee the exchanges makes it challenging for investors to determine their authenticity and credibility.
Many people loss their investments and left penniless when the exchanges they sign up for turn out to be fake.
To avoid this kind of bitcoin fraud, make sure to stick with popular Bitcoin exchanges and forums so get informed.
Fake Cryptocurrencies
Presenting a new cryptocurrency as an alternative to Bitcoin is a common scam nowadays. The notion behind this move is that it is too late to cash in on Bitcoin that one needs to invest in an alternative (upcoming cryptocurrencies). People perpetrating such fraud take money from customers to invest in the fake cryptocurrency and then redirect the funds to personal bank accounts.
Pump and Dump Scams
This scam has become a big concern that the U.S. Commodity Futures Trading Commissions issued a guide to help investors be aware if the potential risks of cryptocurrency like Bitcoin.
What happens in such a scenario is, a group of scam artists pull forces and buy a bunch of stocks. A move to drive the stock prices higher then get outsiders to invest. They often promise the investors easy money.
Bitcoin has been a target of such scams especially in the U.S. It is more of an old scam perpetrated in a new and unusual way people are not prepared for. These scams are often promoted with fake news and fake celebrity endorsement.
To avoid falling victims, investors should avoid single tip purchasing.
- Cloud Mining Schemes
This has been witnessed across the world. In order to extract new bitcoins without buying or exchanging, one needs to mine. This is however a resource intensive-activity that many users might not opt for. There are thus companies that provide regular users or enable them to mine at a fee.
There are however scammers that will use this as a platform to rip off investors. Talk of those operating without being transparent of the true cost and diminishing returns. Others do operate Ponzi schemes that see some investors losing in the end.
- Crypto-jacking
Scammers tend to use investors’ computers or smartphones’ processing power without their permission to mine cryptocurrency for their own benefit.
If you notice that your device is slower than usual, consumes battery quickly or crashes, you might have been crypto jacked.
Dealing with Cryptocurrency Scams
As an investor in the new digital monetary mechanisms, you should recognize that there are risks involved in such transactions. You should beware of the possibilities of losing your cryptocurrency investments.
It is recommended that when looking into cryptocurrency companies and startups, ensure that they are block chain-powered. It implies that you should be track detailed transaction data. They should also have solid business plans that solve real problems.
The same companies should be able to specify their digital liquidity and ICO rules. It therefore means that you should be more cautious of companies that lack such characteristics.
Conclusion.
As much as it might be tempting to engage and exchange currency to bitcoins and cryptocurrency, get to understand your options. Seek knowledge and more understanding as this is an evolving trend. This involves the risks such as scams and how to avoid them.
