Cryptocurrency a fraud or a secure investment Option
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Cryptocurrency a fraud or a secure investment
Money is an important part of our life. It enables us to meet our fundamental necessities, such as purchasing food and shelter and paying for healthcare. And if we don’t have enough money, both our own well-being and the overall well-being of the community suffer severely. At the same time, solid money management is necessary.
The most crucial component of money management is to invest appropriately so that your hard-earned money may now work for you. An investment is the utilization of funds to generate extra revenue or a value gain. Many of us consider cryptocurrency when considering investments. Cryptocurrency is a big field to learn about and work in. So, let us gather some knowledge about how it looks and what the current state of cryptocurrency is.
What does the term cryptocurrency mean?
Cryptocurrency is a form of digital payment that does not rely on banks to validate transactions. It is a peer-to-peer payment system that allows anybody, anywhere to send and receive money. Cryptocurrency payments exist solely as digital inputs to an online database identifying specific transactions, as opposed to tangible money carried about and traded in the real world. When bitcoin funds are transferred, the transactions are recorded in a public ledger. Digital wallets are used to store cryptocurrency.
Because it utilizes encryption to authenticate transactions, cryptocurrency got its moniker. This implies that complex coding is used to store and transfer bitcoin data between wallets and to public ledgers. Encryption’s purpose is to ensure security and safety.
Bitcoin, the first cryptocurrency, was launched in 2009 and is still the most well-known today. Much of the interest in cryptocurrencies is speculative, with speculators sending prices high at times. Some of other cryptocurrencies are-
1)Ethereum: Ethereum, which was created in 2015, is a blockchain platform with its own cryptocurrency known as Ether (ETH) or Ethereum. After Bitcoin, it is the most widely used cryptocurrency.
2)Litecoin: This money is much like bitcoin, however it has moved faster to build new innovations, such as speedier payments and processes to allow for more transactions.
3)Ripple: Ripple, which was launched in 2012, is a distributed ledger system. Ripple may be used to track more than simply financial transactions. It was developed in collaboration with numerous banks and financial entities.
Risks associated with cryptocurrency?
More than stock markets, cryptocurrency exchanges are vulnerable to hacking and becoming targets of other illicit activity. Security breaches have resulted in significant losses for investors who have had their digital currencies stolen, prompting many exchanges and third-party insurers to begin offering hacker protection.
It is also more difficult to store cryptocurrency safely than it is to buy stocks or bonds. Cryptocurrency exchanges like Coinbase (NASDAQ: COIN) make it relatively simple to buy and sell crypto assets like Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH), but many people are wary of keeping their digital assets on exchanges due to the risks of allowing any company to control access to their assets.
You do not have complete control over your assets if you store cryptocurrencies on a centralized exchange. A government request could cause an exchange to freeze your funds, or the exchange could go bankrupt, leaving you with no way to reclaim your money.
Truth of these cryptocurrency systems
Bitcoin and other cryptocurrency supporters argue that these financial platforms are inherently trustless – that is, they are not directly linked to any nation-state, government, or body. They might claim that Bitcoin is superior to traditional physical currencies since it is not reliant on, say, the federal government of the United States.
Grund fest points out that, whether you think it’s a good or negative thing, it’s not totally correct. Cryptocurrency is not completely trustless. They are still dependent on the underlying technology that powers cryptocurrencies like Bitcoin, much of which is based in China. The Chinese government could conceivably make substantial changes to cryptocurrencies by imposing its will on the data miners who keep them running.
Why Is Cryptocurrency Not Too Good Investment?
Cryptocurrency is still in the price discovery phase, which occurs when an asset fluctuates until its value is determined by supply and demand, society, investors, the economy, and a variety of other factors. Because it is a new technology, some see it as a risky investment for long-term growth and stability. Others, on the other hand, believe it is a wise investment.
Bitcoin fraud and cryptocurrency scams?
Unfortunately, cryptocurrency criminality is on the rise. Scams with cryptocurrency include the following:
1)Bogus websites: Scam sites with fake testimonials and crypto jargon promise big, guaranteed profits if you keep investing.
2)Virtual Ponzi schemes: Cryptocurrency thieves promote non-existent chances to invest in digital currencies and create the illusion of high returns by repaying existing investors with new investors’ money. Bit Club Network, a scam organization, raised more than $700 million until its perpetrators were indicted in December 2019.
3) “Celebrity” endorsements: Scammers appear online as millionaires or well-known people, promising to multiply your investment in a virtual currency but instead stealing what you contribute. They may even utilize messaging applications or chat forums to spread rumors that a well-known businessperson is endorsing a particular cryptocurrency. After encouraging investors to buy and driving up the price, the scammers sell their position, and the currency loses value.
4) Romance scams: The FBI warns of an increase in online dating scams in which con artists persuade people they meet on dating apps or social media to invest or trade in virtual currencies. In the first seven months of 2021, the FBI’s Internet Crime Complaint Center received over 1,800 reports of crypto-focused romance scams, with losses totaling $133 million.
Otherwise, fraudsters may pose as reputable virtual currency dealers or set up fraudulent exchanges to deceive consumers into sending them money. Another type of crypto scam involves false sales pitches for cryptocurrency-based individual retirement plans. Then there’s plain cryptocurrency hacking, in which hackers break into digital wallets where people keep their virtual cash to take it.
FTX and Luna case in cryptocurrency
TerraUSD (commonly known as UST) and Luna are sibling coins that operate on the same blockchain. Terra is a blockchain network that generates Luna tokens, comparable to Ethereum or Bitcoin. Terraform Labs’ Do Kwon and Daniel Shin founded the network in 2018. The UST coin was designed by Terraform Laboratories to be an algorithmic stablecoin on the Terra network. Whereas other stablecoins (such as USDC or Tether) are fiat-backed, the UST would not be. Rather, the value of UST would be supported by the value of its sister token, Luna. LUNA Terra-In May, Terra LUNA’s market valuation fell by 99.99%, causing quite a commotion.
However, the unraveling was triggered by the algorithmic stablecoin TerraUSD (UST). Meanwhile, Terra’s founder, Do Kwon, proposed a fork in order to resuscitate the project after it had imploded. Terra eventually saw a chain split, with the new chain known as Terra 2.0 and the old chain known as Terra Classic. Luna Classic (LUNC) increased nearly 100% after its premiere in late May 2022, while LUNA (LUNA2) declined by roughly 40% during the same time period.Write this case in more detail
FTX, third-largest cryptocurrency exchange by volume, is in trouble, threatening to plunge the digital asset market into another downturn. It alleged that the balance sheet of Alameda, a crypto hedge fund owned by FTX’s creator, Sam Bankman-Fried, contained billions of dollars in FTX’s own cryptocurrency, FTT, and that it had been used as collateral in more loans.
If this is the case, a drop in the value of FTT could harm both enterprises because of their combined ownership. However, FTT itself had no value beyond FTX’s long-standing commitment to buy any tokens for $22, raising concerns that the entire organization was based on sand.The slow-burn issue was propelled into high gear on Sunday when Binance’s chief executive, Changpeng Zhao, tweeted that his business was selling its FTT holdings, worth around $500m, due of “new discoveries that have come to light”.From there, things just got worse. The value of FTT plummeted, and FTX customers began withdrawing funds in a bank-run-style exodus.
FTX FULL CASE- Read Here
Is bitcoin too risky for the typical investor to invest in?
In comparison to most investments, bitcoin “is an extremely volatile, highly dangerous investment.” “If you look at the price of bitcoin historically, there have been a number of situations where it’s really soared and then comes tumbling down really quickly.”
(For example, after surging to nearly $20,000 in 2017, bitcoin’s price fell and lost a third of its worth in a single day, and it dropped to as low as $3,122 in 2018, wiping billions of dollars from the total cryptocurrency market value.)
While this might result in large gains, it can also result in large losses. As a result, some investors compare bitcoin to gambling and suggest investing just what you can afford to lose.” You must be mentally and financially prepared for the possibility that [a crash] will occur again. It could occur at any time.
Some latest news about crypto?
1)At the G20, India will try to reach an agreement on a roadmap for regulating cryptocurrency.
2)Tesla Reports a Loss of $204 Million From Bitcoin Investments in 2022.
3)Bitcoin Barrels Heading for a Record January as the Crypto Market Jumps by $280 Billion.
4)According to the report, India could consider lowering the 1% TDS rate on cryptocurrency trade.
5)Crypto Firms Go Out of Business as Cryptocurrency Collapse Continues: Company Officials Blame the Failure on The Low Liquidity of the Crypto Market Caused by Last November’s Collapse Of FTX, Etc.
Written by – SAKSHI MATHUR
World’s 7 biggest financial scams that burnt Investor’s money till its teeth, CLICK HERE
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