Today Cryptocurrency has become a breaking topic to discuss anywhere the price of bitcoin recently reached 50,000 on the other hand various payment platforms including PayPal square and bid pay are now accepting payments in several cryptocurrencies including bitcoin investors are now putting more money in cryptocurrencies and it also becomes easier to trade them on established platforms and they have their coins as well cryptocurrencies are highly volatile and are not accepted everywhere.
BUILDING TRUST IN CRYPTOCURRENCY IS STILL NOT EASY
Now it’s time to discuss some of the disadvantages of this digital currency. Illegal activities such as cryptocurrency transactions are highly secure, it is hard for the government to track down a particular user by their wallet address let me tell you that cybercriminals have often used BTC as a mode of exchanging money and various illegal deals such as purchasing drugs on the dark web furthermore some people use cryptocurrencies to convert their illicitly obtained money immediately to hide the source volatility while investing money in cryptocurrency comes with the potential of high return the crypto market is highly volatile and you might end up experiencing great losses as well why because the value of the coins can change widely in a short period.
Moreover, various issues like hacking incidents can result in losses and tax implications it is worth noting that the IRS has suggested that virtual currency transactions are taxable by law this means that if you are a taxpayer you will have to report crypto transactions while filing your tax return. However, it is not yet clear that how the taxpayer can report the value and what they have to pay as taxes.
Data loss results in financial loss you already know that the developers aim to create source code that is virtually untraceable impenetrable authentication protocols and strong hacking defense have made it safer to put your money in cryptocurrencies.
However if you somehow lose your private key to the wallet you can not get it back without the private key, your wallet will remain locked and you cannot take coins out of it this will eventually result in financial loss.
TYPES OF CRYPTOCURRENCY SCAMS
SOCIAL ENGINEERING SCAMS
In this type of scam, the scammer uses manipulation as a tool and deceit vital information of users’ accounts. In these scams people think that they are dealing with trusted agencies, government officials, tech support. The scammer takes time and gains the trust of potential victims so that they can get vital information.
The scammer uses dating platforms to fool the victim. They create a fake long-term relationship with the victim so that they can get the confidence and after that fool the victim.
IMPOSTER AND GIVEAWAY SCAMS
Scammer fool by pretending to be a famous influencer, celebrity, business person. To capture the target victim then they promise to multiply the cryptocurrencies sent to them in what is known as giveaway scams. The messages are so well written that people are easily fooled.
Scammers are interested in crypto wallet private keys, these are the keys that are required to access funds.
Scammers blackmail target victims by giving mails, they claim to have records of adult websites by that they threaten the victim to expose their private keys unless they share the information.
Today cryptocurrency is no doubt an excellent platform for investors but unfortunately cryptocurrency has its pros and cons. If people want to do safer investments they should do their research. For instance, Grauer shared that every Defi project should have a code audit available to make investors feel safer.