The point of using a digital currency is that it’s completely decentralized and disconnected from any government control. Yet, some exchanges completely defeat the purpose of digital currency by placing it into third-party systems. It is essential to understand that we no longer have to give up our control over our assets and shouldn’t be dependent on governments to protect them.
This is a review of “Tim Swanson’s” – “Eight Things Cryptocurrency Enthusiasts Probably Won’t Tell You.” Read on to know more.
Here are eight areas that require your attention:
A Hong Kong-based digital currency exchange that is known to be hacked several times in the past. A little over a year ago, $65 million dollars’ worth of bitcoins were stolen from the exchange. Till now, Bitfinex has failed to provide evidence as to how they were hacked or where those funds led to. Users were fooled by the potential for returns but in turn faced a major loss as their accounts were left empty.
2. Ransomware, Ponzi’s, Zero-fee and AML-less exchanges
A report from Xinhua was released last month that read:
China’s two biggest bitcoin exchanges, Huobi and OKCoin, collectively invested around 1 billion yuan ($150 million) of idle client funds into “wealth-management products.”
In simple words, these exchanges were functioning while charging zero-fees by using customer deposits to invest in other financial products without the customer’s knowledge. According to insiders and reporters that many exchanges in China carried out similar practices. Also, exchanges in developing countries lacking AML and KYC measures majorly benefit from scams and thefts.
3. Initial Coin Offerings (ICOs)
Many investors are chasing quick profits instead of utility. Recently, many firms are aiming towards scamming practices due to which several other legitimate ICOs are suffering. Several ICO boot camps in China were set up with past experience in pyramid schemes, this leads to not just single fraud incidents but very frequent ones as well.
4. VC-backed entities
5. The decline of Maximalism
6. Market caps
We have very little idea of what is really happening with Bitcoin transactions or any cryptocurrency for that matter. Market cap is based mainly on a company’s assets and future cash flows but with cryptocurrencies, it is completely misleading. Especially, when random meaningless coins sell a small segment of their total supply then, claim a huge market cap.
7. Buy-side analysts and con media
Many big-name media companies practice a biased reporting which mainly focus on the benefits of coins but not equally shed light on the potential risks as well. They cover basically everything and anything regarding market caps, statistics and basic buy/own cryptocurrencies articles. But what if these major companies are funding other odd companies side by side?
The point is, that if these firms want to be taken seriously, they might as well take on the best practices so they support long-term capital inflows.