We can often hear about how volatile cryptocurrency is, and how easy it is to lose to hacker attacks on markets, phishing, or plain scamming. There is a darker side to the digital money world. Theft and market price manipulation aren’t that uncommon, and this is what could drive investors and new users away.
Digital Currency is Vulnerable
For all security strengthening efforts, crypto is still highly vulnerable, and it’s possible it will always be this way. It stems from it’s nature – privacy, anonymity and ease of use. You cannot reverse a transaction once you click “send”. It’s done, there is no way back, no refunds unless the owner of the wallet you’re sending the coins to decides to give you a refund.
The anonymity and privacy part also opens up opportunities for shady dealings, like sale of illegal goods, or plain money laundering. It is not unheard of for Bitcoin to be used as the main currency in the darknet market. This is kind of mitigated by the fact that many exchanges require every single little personal detail to partake in cryptocurrency purchase. Still, many services, “Bitcoin tumblers”, exist for the sole purpose of “laundering” Bitcoin and other crypto.
Market Owners Need to Implement Better Safety Measures
Scams are common, both small and large scale. An example of the latter one could be OneCoin, a pre-mined cryptocurrency specially designed as a Ponzi scheme, lacking even a blockchain. The market is also prone to price manipulation, such as the pump and dump strategy of “whales” – owners of great amounts of money and assets illegally manipulating the market price for a profit.
With the recent hacking of the South Korean based exchange Yapizon, a question arises. Is cryptocurrency really safer than fiat money? These happenings make the news very often. Can something be done about the “dark side” of cryptocurrencies? Let us know in the comments below!