Crypto is digital currency, which means it only exists virtually. To purchase cryptocurrency, a person has to transfer real money into a crypto account using an app or crypto-equipped ATM.

You might have heard of crypto referred to as Bitcoin. That's a brand name, and new crypto companies pop up all the time, creating new brand names. The value of cryptocurrencies can fluctuate wildly, and crypto companies can go bust without warning, taking investors' money with them.

Cryptocurrency has no consumer protections, meaning that once you buy crypto–or put your money into a crypto account created by someone else–it's hard to get your money back. That's one of the reasons scammers love getting paid with crypto.

Scammers use many tactics to get people to pay them in crypto. They may try to befriend you online and then suggest it as an "investment." Other times, they may pose as law enforcement and demand you pay a fine or bond in crypto.

Occasionally, they trick people into believing their savings would be safer if they moved it into a “government locker" or “government kiosk,” which is really just fake name the scammer uses for a crypto-equipped ATM.

If you suspect you paid a scammer in crypto, report it right away.

Find more advice about choosing real brokers on our "Investing Safely" page.