The Dangers of Bitcoin: Avoiding Shady Operators and Illicit Dealings

Bitcoin has been through an amazing transformation over the past fourteen months. The digital currency opened 2017 with a value of around $800, and it closed the year just after a staggering $17,900 high. Investors have seen small portfolios increase in value many times over, with some of the earliest investors becoming overnight millionaires.

The sudden growth of Bitcoin has brought crypto currencies into the spotlight for the first time. Bitcoin has been a trading option since 2010, and it achieved parity with the dollar in 2011, but it is only just being taken seriously by the mainstream market. Until its meteoric value rise, many had written Bitcoin off as a facilitator of underground transactions – or dismissed it as a passing fad with little value.

Bitcoin as a viable investment

As Bitcoin prices continued to climb in 2017, interest in owning the digital coins escalated. Property and financial assets are being rejected by younger investors who see Bitcoin, Ethereum and Litecoin as viable assets with future growth potential. Though some suspect the Bitcoin bubble will burst, backed by a significant wobble in the coin’s value during 2018, many feel the real potential of Bitcoin is yet to get going.

Attitudes to Bitcoin are changing, in some areas at least. JP Morgan told investors recently that Bitcoin could be the “holy grail” of financial assets if EFT exchanges can be established to regulate transactions. Other banks have taken a wary view, blocking purchases of Bitcoin on credit and refusing to bank Bitcoin as a value asset. National differences also exist, with Egypt banning Bitcoin entirely and China blocking crypto currency brokers. Other countries have welcomed Bitcoin and will even accept it as legal tender.

Staying safe with Bitcoin

There are pros and cons to Bitcoin, and any investor needs to weigh their options up carefully before they commit. There is the chance of an incredible payoff if you invest in crypto currencies: but you take on a high level of risk in the process.

Bitcoin represents a big gamble to the buyer. It is not a stable currency, it has no international protection and no central bank, and if the value plunges then investors can do nothing but accept their loss. The coins you purchase for $2,000 on Monday could be worth absolutely nothing by Tuesday, and there will be no government bailouts or international loans to prop up a failing cryptocurrency. Bitcoin is also vulnerable to theft. It is entirely digital, so hackers who can access currency wallets remotely can steal large sums of money – as happened recently in Japan with the $530 million Coincheck exchange heist.

Cryptocurrency scams and shady operators

Bitcoin is also vulnerable to scams and fraudulent transactions. All trades using Bitcoin are recorded in a public ledger to control the currency; however, all of those trades are entirely anonymous. There is no way to link a Bitcoin purchase or transfer to an individual. This can benefit those who want privacy and security when they buy online, but it also works against the buyer. If cryptocurrency purchases cannot be traced, then fraudulent transactions are also anonymous.

Bitcoin has been linked to black market transactions and dark web sales. It is also used by criminals in cases of extortion and blackmail. Because of the secretive nature of crypto currencies and the lack of overall regulation in this sector, scams are also common. Early in 2018, leading Bitcoin exchange Bitconnect closed down suddenly after allegations emerged that it was operating an illegal Ponzi scheme. Unscrupulous brokers can take advantage of consumer naivety and profit heavily from their lack of knowledge – with little comeback for those affected.

Bitcoin may be a worthy investment for anyone who is willing to take a gamble on its value. However, it is important to stay with trusted exchanges and brokers, and to read any small print thoroughly before signing with an investment fund. Some websites rank bitcoin service operators based on their reliability and that is a good way to start your quest to finding the most trustworthy way of dealing your cryptos. Bitcoin can be purchased relatively easily online in most jurisdictions, without the need for a third-party broker. Take control of your own Bitcoin investments and avoid being targeted by shady operators.

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