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If you like investing in largely unregulated currency markets noted for appealing to criminals, then cryptocurrency is right up your alley.
Just last May, hackers stole $40 million from crypto exchange Binance. But even if you have never had any problems using digital currency, you shouldn’t be surprised that the world of Bitcoin, Ethereum and other cryptocurrencies is rife with fraud.
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How it works
A cryptocurrency is an electronic currency — not paper bills or metal coins — that operates outside governments and central banks, such as the Federal Reserve Bank. Owners keep cryptocurrencies, such as Bitcoin, in electronic wallets, which are password protected. You can transfer money between wallets anonymously to buy a pizza, sell a car or even pay a ransom, provided the other party in the transaction accepts Bitcoins.
Some of those other parties include AT&T, Microsoft and Overstock.com, although many businesses don’t accept cryptocurrencies.
Bitcoins can be bought and sold on exchanges using U.S. dollars and other traditional currencies. And new Bitcoins are created by harnessing a computer to solve increasingly complex mathematical problems, a process called “mining,” which requires major computing power and lots of electricity. Those who solve the problem are rewarded with a Bitcoin.