Posted On: May 5, 2026 by Austin Bank in: Fraud Alert General
What is Cryptocurrency?
Cryptocurrency is a virtual or digital currency that uses cryptography to secure transactions. It is decentralized, meaning it does not have a central authority that regulates or taxes it.
Crypto is based on blockchain technology, which is a distributed ledger that records transactions and is enforced by a network of computers. No participant can change or tamper with a transaction after it’s been recorded to the shared ledger. Each block is connected to the ones before and after it, forming a chain of data as an asset moves from place to place or ownership changes hands.
Important: It is important to understand that since this currency uses cryptography to secure its transactions, once a transaction is made there is absolutely NO way to get the funds back or track them. This is important because it allows criminals to receive funds for illegal acts without it being traced back to them.
Forms: Cryptocurrencies include Bitcoin, Ethereum, Polygon, and Dogecoin.
What make cryptocurrency have value?
Most cryptocurrencies have a finite amount of “coins” available, when the currency becomes more valuable the entity behind the coin has no easy way to simply create more coins or add on to its supply. Where the USD is a fiat currency with physical bills backed by the United States government, cryptocurrencies are purely digital. Its value is also found in the trust of decentralization, where transactions are secure, transparent, and verified by a global consensus.
What NOT to do
If you are shopping on a website or trying to engage in a transaction with an individual and they tell you that they can only do it in Bitcoin (or other cryptocurrency), this is an immediate red flag. You should proceed with caution and ask yourself why they would want to use cryptocurrency for this transaction. If it seems too good to be true, then it is. They are most likely trying to get you to send them money in a fraudulent way and are using Bitcoin as a way to ensure you will never get the funds back. Do not use Bitcoin as a currency with an individual that you do not know, especially if they remain anonymous.
Why is cryptocurrency a risky way to make transactions?
Volatility: The value of cryptocurrency relative to the USD fluctuates dramatically day to day, which can lead to financial losses. While the USD fluctuates in value by an average of .2% day to day, cryptocurrencies like Bitcoin can fluctuate up to 10 to 30 times this amount every day.
Example: You make a purchase for a car in Bitcoin using 1 coin, you plan to sell it to someone in one month. The value of that coin is $50,000 today in USD, though when you go to sell it the exchange rate is only $44,000 USD per one bitcoin. You still only have one bitcoin, though the value has decreased dramatically.
Regulatory Uncertainties
Cryptocurrencies are not regulated, which means if you are the victim of a financial crime that used bitcoin, no legal action can be taken. It also leaves people vulnerable to fraud or cybersecurity risks, since hackers can attack your digital wallet and steal your funds with virtually zero risk to them.
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