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Friday, November 15, 2019  Spokane, Washington  Est. May 19, 1883
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BBB Tip of the Week: Cryptocurrency red flags and what you can do to protect yourself

By Tyler Russell BBB Northwest and Pacific

Watching the reel lines on the slot machine go round and round, listening to the jangling bells, you wait and hope to hear the cha-ching of coins.

Yay! I won! A casino’s bells, dings and flashing lights draw players in, tempting them to keep playing until they hit the big one, quit their job and live the life of luxury. When I play the slot machines, I only spend money I can afford to kiss goodbye. Gambling isn’t an investment plan and the odds are always against the player. This same philosophy should apply to the latest get-rich-quick dream: cryptocurrency.

Cryptocurrency has a place and purpose; it is a resource for investing and transferring money all over the world without incurring hefty fees and doing so from under the radar of governments. But, unlike the dollar that is backed by the U.S. government and is a physical item, cryptocurrency is digital code, not considered legal tender, and banned in many countries.

Once you purchase crypto, you have entered the world of blockchain and nodes. The blockchain is the means of transporting the data information, and the nodes are the receivers. Different cryptocurrency companies have various nodes, which store transactional information.

Since cryptocurrency is new and not backed by a government entity, the price valuation is volatile. You may have heard stories of people making thousands overnight, but the reverse is also true – people losing their money overnight. One red flag for investing in crypto is “too-good-to-be-true” statements of a quick return with no or low risk. Performance and risk go together. The higher the return, the greater the risk.

With many companies joining the crypto bandwagon, be aware of initial coin offerings, or ICOs. ICOs are fundraising for new crypto. Many ICOs are legitimate; but some are set up to take your money but do not have a plan or the technology to back this up. So you can kiss your money goodbye.

Crypto is also an excellent vehicle for scammers since many users don’t yet understand the technology. These digital transactions are not reversible, so goodbye if you are the victim.

Secure storage of the digital code is imperative to prevent theft, loss, damage or a cyberattack. That also means if you forget your password or credentials you could, again, kiss your money goodbye. Sensing a theme here?

Better Business Bureau Northwest and Pacific offers the following tips when dealing with cryptocurrency:

Crypto value can change by the hour, so know that an investment worth thousands today might be worth only hundreds the next day.

Be suspicious of unregulated brokers and exchanges that offer too-good-to-be-true returns, charge high fees or keep your money.

As transactions are not reversable, know that you are unable to get your money back.

Cryptocurrency investing is speculative and high risk. Only invest what you can afford to lose. Knowledge of the technology is required to trade cryptocurrency, so if you are going to dabble in it, do your homework.

You can find out more information about companies that deal in cryptocurrency by going to our website at www.bbb.org. If you know someone or have been scammed yourself, you can submit a Scamtracker Report at www.bbb.org/scamtracker.

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