Investments: Are cryptocurrencies a scam?

*Cryptocurrencies are regarded as a form of investment asset and store of value, but they are not governed by any authority

Alexander Davis | ConsumerConnect

Several individuals and groups have always seen the digital currencies as a scam over time.

Some have asked, ‘what are cryptocurrencies used for?’

Cryptocurrency has been as “a digital currency designed to work as a medium of exchange through a computer network that is not reliant on any central authority, such as a government or bank, to uphold or maintain it.”

ConsumerConnect reports in simple terms, cryptocurrency is a non-physical (digital) currency.

It acts as a means of payment (medium of exchange).

Cryptocurrency is also regarded as “a form of investment asset because it is a store of value.”

Ms. Oluwatosin Olaseinde, a financial literacy expert and Founder, Money Africa and Ladda, in her recent electronic newsletter shared via a blogpost, also said that they are unlike regular currencies, such as the Naira and US Dollar, etc., that are backed by a Central Bank’s authority.

Cryptocurrencies are not governed by any authority, she stated.

Olaseinde also explained this is why crypto is sometimes believed to be a scam.

The absence of a governing authority makes it possible for anyone to decide to create a cryptocurrency, encourage people to buy in, and then delete the existence of the cryptocurrency, and make away with people’s money, she declared.

According to her, this is also the reason it “is considered as a very high-risk form of investment.”

Olaseinde, in ‘My Money Series’ newsletter further said: “The advice for anyone who is diving into cryptocurrency as a beginner is to conduct due diligence.

“As much as possible, confirm that the cryptocurrency you are buying into is backed by a solid project.

“Crypto experts would usually advise that you do your own research.”

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