What is cryptocurrency?

Cryptocurrency is transferred electronically. Thus, there is no physical coin or bill with cryptocurrency, and no third-party institutions are involved in the creation or transfer thereof.

The Federal Trade Commission (FTC) shares these additional helpful facts about cryptocurrency on its consumer website:

  • Cryptocurrencies aren’t insured by the government like United States bank deposits are.
  • The value of cryptocurrency can change “by the hour,” according to the FTC. “An investment that may be worth thousands of U.S. dollars today might be worth only hundreds tomorrow. If the value goes down, there’s no guarantee that it will go up again.”
  • Unlike credit and debit cards, which have legal protections if something goes wrong, cryptocurrency offers no legal protections. And payments are typically not reversible. Once you pay for something with cryptocurrency, you only can get your money back if the seller sends it back.