Consumers, beware: Buying and using digital currency such as bitcoin carries certain risks, according to the Financial Industry Regulatory Authority Inc. (FINRA), Washington, D.C.
Bitcoin is an unregulated peer-to-peer payment system that uses its own currency, called bitcoin, to transact business. Bitcoins are not issued by banks or governments—the bitcoin platform was designed as an alternative to national currencies like the dollar, and to commodity-based currencies such as gold or silver coins.
Consumers can buy and sell bitcoins online or at physical locations. A growing number of physical establishments and exchanges allow customers to buy and sell bitcoins using cash, credit cards, money orders, and other methods. Bitcoins reside in a digital wallet, from which consumers use them to buy items from establishments that accept bitcoins.