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6 Things A Cryptography Enthusiast Will Never Tell You! (Sangli Maharashtra)

Posted on: Thursday, 19 April, 2018  11:19
Updated On: Tuesday, 24 April, 2018  14:00
Expires On: Saturday, 28 July, 2018  05:49
Reply to: ajitgdc117@gmail.com

While many cryptocurrency enthusiasts may believe that the virtual and digital currency market is immune to external happenings and may regulate itself without any external aid, the reality may be otherwise. The market forces have failed to remove the bad actors as many would believe, and cryptocurrency has its own share of hacks and frauds. No FINRA (Financial Industry Regulatory Authority) type organization overlooks the cryptocurrency market and the investors may not have any kind of extensive legal protection while dealing with the crypto-currencies (including Bitcoin). Cryptocurrency can offer you astounding returns no doubt, but there are inherent risks (including volatility and absence of regulations) that the enthusiasts of the digital currency would not talk about. Here is a look at some of the aspects, platforms and issues (related to cryptocurrency) that are also real, but few would tell you anything about them.

1. The Bitfinex thefts

Bitfinex is a well-known cryptocurrency exchange and trading platform. It also stores the Cryptocurrencies. It is today the largest exchange point for BitCoins (10% of all trading). The popular exchange has been severely impacted by hacks in the past years. In 2015, around 1500 Bitcoins of the exchange were stolen by hackers. The next year, Bitcoins of $72 million worth were again stolen from the customer accounts of the company. The grand theft resulted in a 20% decrease in the value of the currency. The exchange has not issued any reports or details related to the hack until today. It recovered from the losses by using the accounts (and the funds) of all the users, which is again deplorable.

2. Investment without client permission

A recent report of Xinhua news agency stated that OKCoin and Huobi ( 2 major cryptocurrency exchanges » in China) invested 1 billion Yuan into the wealth management products that included Cryptocurrencies, without asking or informing the customers about it. Further investigations revealed that a number of small, medium and midsized exchanges use the customer money to buy the Cryptocurrencies and do not even inform the respective clients about it, let alone seeking their permission.

3. Money laundering

The absence of regulations makes cryptocurrency the biggest platform for money laundering. While it may be relatively easier to track the money once it had entered the cryptocurrency system, the source of the monetary investment is barely accounted for. A joke within the financial community that has been popular is that the hackers do not attack the cryptocurrency exchanges like BTC-e as these are the ideal places to launder all the stolen or hacked money.

4. The ICO jumble and irregularities

The initial convenience of fundraising via the exchange or sale of the cryptocurrencies may seem lucrative and relevant. But there is more to the issue than what it seems. The ICO (Initial Coin Offering) fund-raising also has the pre-sales rounds where the investors can buy the tokens at a greater discount. The rate at which the discounts are offered is not disclosed by the ICO organizers. Also, the initial financial inclusion within the cryptocurrency financial world requires that the investor should buy some Bitcoins. The security hence created by the cryptocurrency organizers does not comply with any of the financial or regulatory laws. Further, the absence of governance and accountability has also made cryptocurrency a venue for illicit fundraising.

5. Questionable “Market Cap” accountability

There is no legal, public or private analysis of what is actually going on in the cryptocurrency world. The superficial reports also do not give any in-depth views towards the actual fruitfulness of the currency, and how it can be trusted towards creating a better financial future for all. Remittances, B2B/B2C transactions, dormant/active customer data, various kinds of transactions actually occurring, money transfers…! You may not find any of the information anywhere when you seek it. Bitcoin does not show the real “Market Cap” value, or the assets and the cash flows. It also does not provide financial statements of any other kind that can provide for a thorough and comprehensive inference.

6. Biased reporting

Cryptocurrency has been a favourite of all those with large assets and incomes to play with. The big media names of the media industry, like Coin Telegraph or Coin Desk, have now initiated reporting on the cryptocurrency financial segment, issues and various aspects, through dedicated publications. But all the big wigs in the reporting business still refrain from reporting the darker side of things. The articles and reports you will read will focus on the positives only. While the reputed media and news houses can provide you with more realistic data (in comparison to the sponsored content) yet a clean and unbiased view and in-depth analysis are still awaited.

As the popularity and market value of the cryptocurrency market grows, more regulations and scrutiny are bound to be levied and followed in future. LedgerX is one cryptocurrency exchange that is Federally regulated. While the market is riskier and volatile now, we will see its growth and stability in near future.

It is NOT ok to contact this poster with commercial interests.

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