Even those who don't understand the cryptocurrency craze are well-versed in the valuation of 'Bitcoin' and its decade-long bull market. The rise of 'Bitcoin' has been so significant that the term has become synonymous with the word 'crypto'.
A cryptocurrency can be understood as a digital currency that can be used to buy goods and services powered by blockchain technology and online ledger registration. The most attractive benefits offered by crypto are its decentralization, guest posting, avoidance of banking fees, fast transactions and high level of privacy as compared to traditional transaction models. Blockchain technology has now gone even further to add smart contract functionalities that are proposed to be revolutionary.
Despite the allure of what cryptocurrency has to offer, there are some basic legal issues that need to be thoroughly understood to ensure that you do not fall for a scam.
Cryptocurrencies are not regulated security:
Cryptocurrencies, by their nature, aim to remain decentralized and therefore do not constitute a traditional currency, with checks and balances issued by a monetary authority. Instead, cryptocurrencies are supplied as crypto shares on various exchanges, and do not constitute "listed securities". They are intended to provide many of the same functions as long-established currencies such as the US dollar, euro, or Japanese yen; However, they are not backed or insured by any monetary authority or government. However, it has been observed that some countries are now slowly moving towards this, and the Republic of El Salvador became the first country to legalize cryptocurrency.
Due diligence is key:
Taking full advantage of the unregulated crypto market, scammers are tempting people to invest in fake crypto. Recently there was a lot of hype about buying 'Dubai Crypto Currency', which turned out to be a scam. The Dubai government took action and issued a statement warning the public to refrain from disseminating false information. Furthermore, the central bank of the UAE has confirmed that it does not accept or recognize any cryptocurrencies in the UAE and the only recognized legal tender is the UAE Dirham.
When investing in cryptocurrencies, choose only exchange platforms that are regulated in your jurisdiction. Find out about your license and check regulatory approvals from the Dubai Financial Services Regulatory Authority (DFSA) or Abu Dhabi Global Markets (ADGM). In addition, please read and understand any "voluntary liquidation" clauses of such exchanges. Also, ask about its security features, which include cold storage, and your options for storing your purchased crypto in a crypto hardware wallet.