Cryptocurrency is a form of currency that uses digital encryption for transactions in a decentralized system as opposed to regular currency and derives it’s value from a blockchain which is a public digital ledger. This ensures that every transaction recorded over that particular blockchain cannot be altered from a single computer without altering the value and data of all the computers connected in the chain.

Due to it’s novelty and the fact that it has not been adopted by many governments, the cryptocurrency field is still vulnerable to different methods of fraud.

Schemes like the pump and dump scam where an inside trader buys a cryptocurrency, increases the demand of the cryptocurrency by creating hype on social media causing unsuspecting individuals to buy the cryptocurrency and then dump the coin at a high price causing it to tank and lose value which allows the to make profit buy offloading the currency at it’s peak. There is also the phishing scam where a scammer steals sensitive information such as wallet details to access the victim’s funds.

These different methods can be avoided by being careful before investing in a currency, researching before making any moves regarding any cryptocurrency and avoid giving sensitive data to third parties.

Cryptocurrency is a form of currency that uses digital encryption for transactions in a decentralized system as opposed to regular currency and derives it’s value from a blockchain which is a public digital ledger. This ensures that every transaction recorded over that particular blockchain cannot be altered from a single computer without altering the value and data of all the computers connected in the chain.

Due to it’s novelty and the fact that it has not been adopted by many governments, the cryptocurrency field is still vulnerable to different methods of fraud.

Schemes like the pump and dump scam where an inside trader buys a cryptocurrency, increases the demand of the cryptocurrency by creating hype on social media causing unsuspecting individuals to buy the cryptocurrency and then dump the coin at a high price causing it to tank and lose value which allows the to make profit buy offloading the currency at it’s peak. There is also the phishing scam where a scammer steals sensitive information such as wallet details to access the victim’s funds.

These different methods can be avoided by being careful before investing in a currency, researching before making any moves regarding any cryptocurrency and avoid giving sensitive data to third parties.