Cryptocurrency is a digital form of money that can be sent to anyone through the blockchain technology. You can hold this digital token in your wallet with no intermediaries, allowing you to use your coins as you wish. Australian are becoming increasingly vested in cryptocurrency but without being conscious of the risks involved in this electronic money.
- Cryptocurrency is a form of a digital token made of binary codes- zeros and ones.
- Cryptocurrencies are unregulated which means they are not controlled or overlooked by any authority, bank or financial institution.
- Some cryptocurrencies allow you to withdraw money from ATMs with minimal to zero transaction fees.
- Scammers can trick people into investing in fake opportunities to buy crypto.
Cryptocurrency began in the early 2000s when the first coin to make its mark in cyberspace was Bitcoin. Allegedly, it was created by Satoshi Nakamoto, a person (or a group of individuals) whose identity has never been revealed.
Cryptocurrency works on the concept of cryptography where each token is created by a code with the help of data that is stored in blocks linked to each other. This system is known as the blockchain technology.
“Blockchain is a public ledger, an accounting book of debits and credits that keeps track of tokens or coins in cryptocurrency. It is essentially a way to track the buying and selling of tokens,” says Fred Schebesta co-founder of Finder.com.au.
The blockchain technology was invented in the 1980s. This technology has proven to be efficient in tracking your money and has gained trust among those in the cryptocurrency market.
A cryptocurrency can be created by anyone and thus there are thousands of them circulating in cyber space with some of the most popular ones being Bitcoin, Ethereum, Litecoin and Dogecoin.
These coins are used for trading, purchases, payment systems and for most- it’s also a form of investment. Some cryptocurrencies like Bitcoin allow you to withdraw cash from ATMs with very low transaction fees.
Many people have made profits, and some are claiming to have become millionaires after investing in cryptocurrency.
But can you really make huge profits with small investments in the intangible cyber systems?
Mr. Schebesta says, the possibilities are endless when it comes to making profits with cryptocurrency. “Just like with any form of investment [if] you've done your research you can buy an asset and you can become wealthy."
For someone who’s new to investments and is looking for an easy way to make profit, investing in cryptocurrency can seem to be relatively easy. But high gains come with risks. Cryptocurrencies are unregulated across the world, which means they are not controlled by any authority, bank, or financial institution.
The blockchain technology is created in such a way that investors are solely responsible for regulating and updating transactions of coins. This can make cryptocurrencies unreliable.
Dr. Adam Steen is a Professor of Practise at the Department of Accounting at Deakin University in Melbourne. He says cryptocurrencies has no real value other than what people think it's worth.
According to Dr. Steen cryptocurrency started as an innovative and unique investment opportunity, then gained popularity among people just like any other trend.
In 2017 an alleged cryptocurrency under the name of Plus Gold Union Coin (PGUC) launched in Australia and gathered a lot of interest among migrant communities.
The coin claimed to deliver extremely large profits of over $200,000 in a couple of years with an initial investment worth $7,500 per token, which appeared to be a relatively small amount when compared to the profits.
The promoters behind the currency targeted ethnic communities and soon became a trustworthy source. Those who showed interest were invited to large and well catered events in different cities across the country.
The presentations at these lavish events were made very intricately to appeal to the potential investor and not let the attendees want to leave the room without signing up.
John Doe (whose name has been changed to protect their identity), says he came to know about the Plus Gold Union Coin through friends, in 2017.
"An acquaintance approached me saying that there is this PGUC coin and if you invest in that you would get handsome returns...”
Mr. Doe says their method of operating sucked in a lot of people from the community.
Then, in December 2017, the PGUC cryptocurrency price crashed, and investors began suspecting they'd been scammed.
Often scam agencies tend to target the most vulnerable individuals, and it’s easy to understand why migrant communities across the world tend to get easily scammed.
Language barriers is one of the major contributing factors for migrant communities to fall victims of such scams.
Do your research
It's easy to be deceived by scams and phishing scandals and even the biggest companies in Australia lose heavily to scammers that appear legitimate.
But how can you spot a scam?
Dr. Steen says it’s best to avoid unsolicited emails and don’t respond to calls and investment advice that are unverified even if they are from someone you know.
We have a government agency in Australia that is set up to provide information to consumers and businesses to try and protect them from scams.
He suggests if you are a victim of some sort of scam you need to report that to the relevant authorities to allow the government to be able to shut those avenues, often track those people down if they can.
Tips to make the right investment
Get advice from people who are qualified and experienced regardless of which community you belong to. Financial advisors, lawyers, and accountants across Australia can offer you verified advice.
If an investment looks too good to be true, it most likely is. If someone's promising you enormous returns in the form of cryptocurrencies it could be a sign that they’re trying to lure you into a scam.
Lastly, don't rely on people’s speculation and rumours and avoid taking any advice from people who really aren't experts.