Cryptocurrencies, often referred to as virtual currencies, are currencies supported neither by the Government of India nor the Reserve Bank of India. These are digital assets secured by cryptography that are used as a medium of exchange. They are valid as they are backed by a blockchain system with an open, distributed ledger recording transactions.
Cryptocurrency exchanges are slowly getting accepted. There are many platforms that allow customers to trade cryptocurrencies for other assets, including conventional currency and other digital currencies. There are different forms of cryptocurrencies such as Bitcoin Cash (BCH), Ethereum (ETH), Litecoin (LTC), Cardano (ADA), Polkadot (DOT), Stellar (XLM), Binance Coin (BNB), and countless others in the market now. Currently, one bitcoin equals 26,44,199.55 Indian Rupees.
When you’re looking into digital cryptocurrency companies and startups, we recommend that you confirm that they’re blockchain powered, which means they track detailed transaction data which is visible all time to us.
Types of cryptocurrency frauds:
Cryptocurrencies had become a platform for all illegal scams/activities for cybercrime and they are hard to trace.
(a) Initial Coin Offerings (ICO) – An initial coin offering (ICO) is the cryptocurrency equivalent to an initial public offering (IPO). Few ICOs come up with a fake team, fake projects, fake wallets, fake social media or fake trading with the only intention to cheat the people.
(b) Ponzi Schemes – Scammer typically requests/lures that the victims invest in a product or service associated with the ICO and is promised returns at a later stage.
(c) Pump and Dump Schemes – Investors and traders are in a mad rush to buy the token at an early phase when the initial price is low. Once they sell the cryptocurrency, the price drops abruptly.
(d) Exit Scam – Promoters who collect funds for an ICO suddenly disappear while leaving investors without any information. Often this type of ICO does very exhaustive PR campaigns social media and blogs to attract people to invest luring high returns.
(e) Phishing – Scammer’s trick to cryptocurrency investors is through fake websites appearing to be legitimate and also use fake apps (Not in App Store/Play Store) and often send phishing emails showing fake images of Wallet Balances to lure them to invest in cryptocurrencies.
(f) Exploding Airdrops – Scammer creates a trap for users expecting to receive free tokens, click on the links, thereby giving away their private information and ultimately losing their coins.
Which wallet to choose for storing cryptocurrencies:
(a) A cryptocurrency wallet — It functions as a traditional wallet, but instead of paper currency, it holds proof of your digital currency.
(b) Desktop wallet – These are applications that run on your computer and store cryptocurrency. You have complete control of your funds on your desktop wallet. There is no way that a third party can freeze or steal your funds unless your system is compromised.
(c) Mobile wallet – These are applications that run on your smartphone to store and control your bitcoin funds. Mobile wallets are the most convenient in making quick payments.
(d) Web Wallet – These are browser-based wallets that can be used to store your digital currencies, but unfortunately, they don’t provide full control and functions unlike your traditional desktop or mobile wallets.
(e) Hardware Wallet – It is the safest option available amongst all and it is a device with the sole purpose of storing your private and public keys.
(f) Paper Wallet – Paper wallets are one of the most unappreciated crypto wallets. What you need to do is write private and public keys onto a piece of paper.
Opening an account with a crypto exchange and its fees:
Similar to opening and trading account, you submit know-your-customer (KYC) i.e., Aadhar Card, Permanent Account Number (PAN) Card, or a Driving License as Identity proof. Charges for crypto trading range from 0.05 % to 0.10 % percent of the transaction value.
Tips for investing in cryptocurrencies:
* Invest a small percentage – Always invest in small amounts even though returns are high.
* Diversify Your Investments – Spread your investments around to several cryptocurrencies.
* Research Exchanges – Use reputed exchanges i.e., Coinbase, Binance, CoinDesk, etc
* Prepare for Volatility – The cryptocurrency market is highly unpredictable, so be prepared for ups and downs.
It’s an uncertain and unregulated exchange and adding to it, anyone can also start a crypto exchange. Investing in something that comes with quick benefits also comes with challenges, so be prepared. If you plan to trade, do your research and invest conservatively to start.
(The author is the founder of End Now Foundation, www.endnowfoundation.org)
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