COLORADO SPRINGS — Cryptocurrencies like Bitcoin continue to grow in popularity, but many people who aren't dealing in this digital money can be overwhelmed by the topic. News5 takes a deep dive into what cryptocurrency is and what the experts say we should know.
Odds are you've heard someone talking about Bitcoin and how cryptocurrency is the way of the future, but you can't touch it or see it and you don't deposit it in a bank.
Bitcoin, Ethereum, and thousands of other cryptocurrencies are the driving force behind a growing digital payment system.
Bob Cook is a cybersecurity instructor at the University of Colorado Colorado Springs and is recognized as one of the university's cryptocurrency experts.
"Bitcoin is thought of as the future of currency by a lot of people and crypto in general because it does not need a third party transaction," said Cook. "However, with it being a peer-to-peer transaction you can think of it as the Craig's List of exchanging money, then there is no regulation to it currently."
If you do a quick search you'll find cryptocurrency ATMs are now a part of our communities. This is allowing people to turn cash into cryptocurrency, stashed in a crypto wallet on your phone. That money can then be transferred to someone else using a QR code.
"So the average consumer can say I have an app on my phone that's my wallet. It's just an app. I can go to the ATM and I can insert cash and scan the barcode and now the wallet on my app has crypto. I think that will really eliminate the barrier to entry and will just continue the popularity of crypto," said Cook.
But there's also a dark side to how cryptocurrency is being utilized by fraudsters and hackers. With no regulation or paper trail, cryptocurrency allows fraudsters to easily cover their tracks. Meanwhile, ransomware attacks are a huge moneymaker for hackers right now who can compromise a business and then ask for payment in cryptocurrency as a ransom.
"If you are planning to just restore your data without paying for decryption we'll sell your company's private data on the dark net," a person is heard saying in a recording provided by LMG Security.
"If somebody is saying you can only pay for this in bitcoin or in some other cryptocurrency that should be a red flag," said Federal Trade Commission attorney Christopher Leach. "If there's somebody promising you a particular rate of return that is high, say double or triple your money guaranteed, that is definitely a red flag for a scam."
Since October of last year, consumers reported losing more than $80 million to cryptocurrency investment scams.
"I would invest in crypto with the same amount of money you'd be comfortable going to Cripple Creek and gambling with," said Cook.
It remains to be seen when and how cryptocurrencies might be regulated here in the United States and globally. Until then, the experts say it's risky to invest money into cryptocurrency that you can't afford to lose.
