What Exactly is Cryptocurrency?
Cryptocurrency is a still-emerging, digital form of currency that is used to complete financial transactions. While it has the potential to become a widely accepted method of exchange, it could also just be a short-term trend. It is both a thrilling new financial landscape and a risky investment to be cautious of.
Thrilling New Financial Landscape to Explore
Cryptocurrency enables a direct exchange between two parties and leaves out any intermediary. In some ways, a cryptocurrency transfer is similar to a cash transaction between two persons, but with the distinction of a digital record produced through a block chain or distributed ledger. The transaction is protected with encryption and stored separately on computers around the world, making it unalterable but—despite a misconception of complete anonymity—probably traceable with enough effort.
Explore with Caution
As you may have seen in the media headlines, digital currency is highly volatile, unregulated, and easily exploited by scammers. If you are interested in investing in cryptocurrency, it is important to be both informed and vigilant.
Digital currency’s value can be significantly affected by numerous factors, like a statement by a famous internet personality or a major purchase or sale by a big-time crypto investor. With our collective appetite for and access to information these days, one small move can set off an abrupt, dramatic shift in the value of a cryptocurrency—potentially resulting in a great financial gain or disastrous loss.
Unregulated and Unprotected
Unlike United States currency, cryptocurrency does not have governmental backing. Thus, if the crypto company you are dealing with fails, you will not have the same level of security of an FDIC-insured savings account. Further, if a transaction turns out badly or you send cryptocurrency to the wrong account, neither the government nor the crypto company is obligated to step in to help.
Then there’s the matter of account access. If you lose your digital key or password, there is no way to retrieve it. This is another frequent headline: “millions lost due to account holders losing their credentials”. Typical digital accounts like your online banking or social media can be reset with a new password, but this is not the case with cryptocurrencies. For these reasons and more, if you are interested in investing in digital money, it is vital to understand all you can about this new kind of asset and how to handle it.
Besides understanding cryptocurrency itself, having awareness on the latest scams is very important. Because cryptocurrency exists only on the internet and because of its newness, it gives a great opportunity for scammers to take advantage. As a relatively new development in the financial world, there are not yet laws that protect individual consumers from crypto-related fraud.
An excellent reference to start with is the Federal Trade Commission’s article called “What to Know about Cryptocurrency and Scams”. If you opt to invest in cryptocurrency, it is important to know the latest scams that are going on.
Work with an Experienced Corning Estate Planning Attorney
Whether you choose to invest in cryptocurrency or not, it’s important to entrust your estate planning goals to an experienced attorney who keeps up with emerging financial trends. Call Roth Elder Law, PLLC today to schedule an initial meeting at 607-962-6162 or complete this intake form and we’ll be in touch.