Confused about cryptocurrencies, like bitcoin or Ether (associated with Ethereum)? Youre not alone. Before you use or invest in cryptocurrency, know what makes it different from cash and other payment methods, and how to spot cryptocurrency scams or detect cryptocurrency accounts that may be compromised.

Cryptocurrency is a type of digital currency that generally exists only electronically. You usually use your phone, computer, or a cryptocurrency ATM to buy cryptocurrency. Bitcoin and Ether are well-known cryptocurrencies, but there are many different cryptocurrencies, and new ones keep being created.

People use cryptocurrency for many reasons quick payments, to avoid transaction fees that traditional banks charge, or because it offers some anonymity. Others hold cryptocurrency as an investment, hoping the value goes up.

You can buy cryptocurrency through an exchange, an app, a website, or a cryptocurrency ATM. Some people earn cryptocurrency through a complex process called mining, which requires advanced computer equipment to solve highly complicated math puzzles.

Cryptocurrency is stored in a digital wallet, which can be online, on your computer, or on an external hard drive. A digital wallet has a wallet address, which is usually a long string of numbers and letters. If something happens to your wallet or your cryptocurrency funds like your online exchange platform goes out of business, you send cryptocurrency to the wrong person, you lose the password to your digital wallet, or your digital wallet is stolen or compromised youre likely to find that no one can step in to help you recover your funds.

Because cryptocurrency exists only online, there are important differences between cryptocurrency and traditional currency, like U.S. dollars.

There are many ways that paying with cryptocurrency is different from paying with a credit card or other traditional payment methods.

Scammers are always finding new ways to steal your money using cryptocurrency. To steer clear of a crypto con, here are some things to know.

Spot crypto-related scamsScammers are using some tried and true scam tactics only now theyre demanding payment in cryptocurrency. Investment scams are one of the top ways scammers trick you into buying cryptocurrency and sending it on to scammers. But scammers are also impersonating businesses, government agencies, and a love interest, among other tactics.

Investment scamsInvestment scams often promise you can "make lots of money" with "zero risk," and often start on social media or online dating apps or sites. These scams can, of course, start with an unexpected text, email, or call, too. And, with investment scams, crypto is central in two ways: it can be both the investment and the payment.

Here are some common investment scams, and how to spot them.

Before you invest in crypto, search online for the name of the company or person and the cryptocurrency name, plus words like review, scam, or complaint. See what others are saying. And read more about other common investment scams.

Business, government, and job impersonators

In a business, government, or job impersonator scam, the scammer pretends to be someone you trust to convince you to send them money by buying and sending cryptocurrency.

To avoid business, government, and job impersonators, know that

Blackmail scamsScammers might send emails or U.S. mail to your home saying they have embarrassing or compromising photos, videos, or personal information about you. Then, they threaten to make it public unless you pay them in cryptocurrency. Dont do it. This is blackmail and a criminal extortion attempt. Report it to the FBI immediately.

Report fraud and other suspicious activity involving cryptocurrency to

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What To Know About Cryptocurrency and Scams | Consumer Advice