Watching the reel lines on the slot machine go around 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 ‘til 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 not under the control of governments. But, unlike the dollar which 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 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 (ICO). ICO is fundraising for new crypto. Many ICO’s are legitimate; however, some ICO’s 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 if you are the victim of a scammer, kiss your money goodbye.
Secure storage of the digital code is imperative to prevent theft, loss, damaged, or a cyberattack. That also means if you forget your password or credentials you could, again, kiss your money goodbye. Sensing a theme here?
Like playing the slots in Vegas, cryptocurrency is speculative and high risk. Remember that before reaching in your pocket for another token.
Roseann Freitas is marketplace manager Hawaii, Better Business Bureau Northwest + Pacific, Honolulu.