Should you invest in crypto currency? What to know about digital currencies and investing safely?

 Crypto money may have appeared to be a niche interest or a transitory craze in the past, but it is swiftly becoming mainstream.

In a series of Super Bowl ads, Matt Damon, LeBron James, and Larry David promoted crypto currency platforms, which were so popular that one crypto currency app crashed after the game.

Furthermore, the Los Angeles Staples Center was recently renamed the Crypto.com Arena after Crypto.com reportedly paid more than $700 million for the naming rights.

There's a lot of buzz these days about crypto currencies, but what is it actually, and is it right for the average consumer or investor?

Vicky Nguyen, NBC's senior consumer investigative journalist, explains what crypto currency is, how to tell whether it's trustworthy, and what red signs to look out for before investing.

What is crypto currency? 

Crypto currency is a type of virtual currency that is recorded on a block chain, which is a type of digital ledger.

Some crypto currencies can be used to make purchases just like cash. Other crypto currencies are treated more like traded equities, with their value fluctuating.

There are over 17,000 crypto currencies, but Bitcoin, Ethereum, Tether, and Binance Coin are among the most popular. Digital platforms or exchanges, such as Coinbase, Gemini, and Crypto.com, are used to trade crypto currencies.

The name "crypto" relates to the fact that transaction information are encrypted on the blockchain, and cryptocurrency owners have a digital "key" that verifies they own the money.

What’s the point of cryptocurrency?

The idea that cryptocurrency is not regulated by a centralised government or agency appeals to certain people. Rather, the virtual money is safely held on digital blockchains, which are hosted by a global network of decentralised computers.

Many people believe that this increases the security, privacy, and liberty of bitcoin users.

Other cryptocurrency supporters are interested in the blockchain, the digital network where bitcoin is stored, and its possible future applications.

According to PricewaterhouseCoopers, the blockchain might be used as a network for sending various types of information, such as securely sharing patients' healthcare information or even gathering votes in an election.

How to buy trustworthy cryptocurrency

If you want to acquire bitcoin, choose reputable services such as Coinbase or Binance. CoinMarketCap is a website that covers well-known cryptocurrencies as well as industry news, so you can do your homework before buying.

If someone asks you for cryptocurrency payments online, especially on social media, be sceptical.

Because bitcoin transactions are irreversible, it's critical to be on the lookout for potential fraud and scams.

President Biden is likely to release an executive order this week directing government agencies to investigate the risks of cryptocurrency trading.

What you should be aware of before investing?

Investing in cryptocurrency carries a number of risks. First, like regular equities, the value of cryptocurrencies can vary drastically.

Mike Bisaro, president and CEO of StraightLine Financial, told Nguyen, "You have to be prepared for extreme volatility."

Furthermore, "absolutely no regulation exists for any of these actors or the business in general," according to Bisaro. "I feel you have to approach it as more or less guesswork."

Make sure your crypto exchange platform allows you to access your tax papers because the IRS now expects you to report any financial gains from bitcoin investments on your taxes.

In conclusion, while cryptocurrencies may offer some intriguing options, it should not be considered as a get-rich-quick scam.

Location: United States

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