(NAPSA)—Social and traditional media have been abuzz with articles and information about the rising phenomenonofdigital currencies. But whatdoesit all mean and should you buy in? WhatIs Cryptocurrency? Cryptocurrency, or simply crypto,is onetypeofdigital currency. Cryptocurrenciesaredistinct from “fiat currencies” such as the dollar, euro or yen. Unlike fiat currencies, crypto isn't represented or organized by physical paper units or coins. Rather, each unit is a unique alphanumeric string of computer code. Also, cryptocurrenciesare notissued by a central bank.Instead,they are controlled by technology that determines how manyunits are produced and how transactionsare recorded. While Bitcoin is one ofthe earliest and most recog- nized cryptocurrencies, more than 1,000 cryptocurrencies currentlyexist. For US.federal tax purposes, cryp- tocurrency is treated as property, which meansselling or exchanging it can have tax consequences. Cryptocurrenciesand Risk Buying, selling andusing cryptocurrencies comes with numerousrisks. In some cases, you can spend and trade crypto, but these products are notlegal tender in the U.S. and most other jurisdictions. No law requires companies or individuals to accept cryptoas a form of payment.If no one accepts a specific cryptocurrency, that cryptowill becomeworthless. + Platformsthatbuy andsell cryptocur- rencies can be hacked, and some have failed. Consumers can—and have— Jost money. + Cryptocurrency payments are irre- versible. Once you complete a transaction,it cannotbereversed. Cryptocurrencies andInvesting All investments come with some degree ofrisk, and cryptocurrencies are no exception. Only invest what you can afford to lose and be aware that you may Jose someorall of your investment. Investing in cryptocurrencies can Cryptocurrency is a digital repre- sentation of a stored value secured through cryptography, a mathemat- ically intensive encryption process designed to enhance data protection and authentication. tokensare sold to investors in exchange for other cryptocurrencies orfiat currencieslike the dollar. Aswith any new industry or concept, be alert for fraud, which has occurred in both ICO and direct currency pur- chases. Pump-and-dump scams are a potential risk with some crypto-related stocks, particularly those that donotlist ona major exchange such as the NYSE or Nasdaq. Crypto Takeaways Cryptocurrencies and the technologies that power them may hold great potential for legitimate innovations in capital raising and financial markets. Butit can bea challengefor investors to verify information aboutthese products to makeinformed decisions. There are also major questions about how these currencies are regulated both domesti- cally and across the globe. The markets for cryptocurrencies continue to display high levels of volatil- ity, and involve speculative risk and the potentialfor fraud. Speculators have been drawn to cryptocurrencies as a way to make a quick profit. Butlike any specula- tive investment, you can lose money. And even whenlegitimate companies flock to a hot, new sector, fraudsters almost always follow suit. Look out for guarantees, unregistered products,claims ofoverly consistent returns, complex strategies, missing documentation, account discrepancies and take many forms, such as purchasing coins in the hope their value increases or pushy salespeople. All are red flags of buying shares in platforms or companies potential fraud. Use FINRA Brokerthatfacilitate blockchain technology and otheraspectsofthe cryptocurrency revolution in the hope they succeed. Another waytoinvest is through an Check” to check the registration status of, and additional information about, the people and firms that tout these a way for companiesto raise moneythat your money, visit the FINRA Founda- tal tokens. A certain number ofthese LearnMore. Initial Coin Offering, or ICO. An ICO is involves the creation and sale of digi- opportunities. Tolearn more abouthowto protect tion's website www.SaveandInvest.org/
