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What is Bitcoin?

Scammers like to demand electronic forms of payment. Most common requests are for gift cards, money orders, E-Transfers and Bitcoin. These forms of payment are usually used because they require no in person interaction, are difficult to trace back to the scammer, and can be accessed from around the world. These transfer methods make it difficult for police to trace the suspect. 

Since Bitcoin is a relatively new and complex currency, but its popularity is growing, we want to provide a brief explanation about Bitcoin to hopefully help citizens understand why they should be skeptical if someone, especially a government, authority, or financial institution is allegedly asking you to pay them with it.

What is Bitcoin?

Bitcoin is one of many cryptocurrencies, but the name is fooling. It’s not an actual currency like the Canadian Dollar. Instead, Bitcoin is a commodity that can be purchased/sold using other currencies, similar to purchasing a bar of Silver. 

Bitcoin’s worth constantly changes, like investing in a bar of Silver. At this point, one Bitcoin is worth tens of thousands of dollars, but it could plummet at any time.

Why do people use it?

  • Fees are usually upon deposit and withdrawal
  • There is no third-party (a bank) that you have to pay typical banking fees to store your funds
  • It is a simple person-to-person transaction; however, each person remains anonymous. 
  • Because its value fluctuates, people see Bitcoin as an investment. It’s risky but could pay out.

Why is it used in scams?

As a digital currency, there is no way to track or identify who is sending or receiving Bitcoin. This is a perfect way for a scammer to receive a lot of money with no way of tracing it back to them. 

Bitcoin involves no face-to-face contact with a bank teller or cashier; instead, money is placed into a machine like an ATM. Scammers are constantly trying to limit a complainant’s interactions with others to avoid the chance of someone warning the person that they are falling victim to a scam.  

Should you be suspicious if someone asks for payment in Bitcoin?

Bitcoin is not a commonly recognized currency, and most citizens don’t understand it, so why would someone ask for payment in it? No government, authority, financial institution, or reputable business will ask you to send Bitcoin. If you don’t understand it, you shouldn’t be paying with it!