‘Money: It's Personal' — What is cryptocurrency?
SAN ANTONIO – Cryptocurrency is a digital currency that allows users to buy items and invest online.
Bitcoin, Ether and Lite Coin are just some of the well-known cryptocurrencies, but new ones are continuously appearing on the online market.
You can buy cryptocurrency by purchasing it with a credit card or through a process called mining, which is a way of earning cryptocurrency without putting any actual money down.
After purchasing or earning it through mining, the currency is then stored in a digital wallet either online, on your computer or on other hardware.
This type of digital currency, however, isn't like your traditional U.S. dollar.
The Federal Trade Commission said cryptocurrencies are not insured by the government like your deposits at the bank. That means if your digital wallet is hacked or the company providing it goes out of business, you may be out of luck.
Cryptocurrency value can change by the hour, which means if you invested thousands today, it could be worth hundreds, or even less, the next day. And there's no guarantee the value of the currency will go up again.
The FTC said that, while cryptocurrency transactions are anonymous, they may be posted on a public ledger, such as a block chain. A block chain is a public list that shows when someone transacts with cryptocurrency.
Information in the block chain may include things such as the sender and recipient's digital wallet addresses and the transaction amount, which could be used to identify the people using the cryptocurrency.
The FTC and the U.S. Securities and Exchange Commission are warning consumers about possible cryptocurrency trading scams, so it's best to research any company you're thinking of purchasing from first to make sure you're making the right decision.
For more information on cryptocurrency from the FTC, click here.
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