Let's Talk About Cryptocurrency Pitfalls

So far, it is accurate to state that crypto technology has come a long way and has yet to make its true mark in the modern world. Many governments and financial authorities are gradually adopting this form of payment, fully aware of its exponential potential in the future world economy. Some institutions were already in the process of adopting virtual currencies until the COVID-2019 pandemic hard-hit the entire world’s economies.

Interestingly, large banking institutions with great global outreach have embraced and declared that cryptocurrencies are here to stay. It’s because of the convenience and secured mobility, especially in online transactions, that make the currency lucrative. With virtual currencies, you stand a real chance to build a bankroll in the most profitable e-commerce landscapes in the world. We summed up the most important pitfalls you may fall into when dealing with cryptocurrency.

Crypto Crimes

Crypto crime is one major problem. There is no doubt that the pandemic has disrupted most people’s way of life. While the majority feel the brunt of the recession, some fraudsters have used the crisis as an opportunity to gain some stability. It is recorded that approximately $1.4bn has disappeared in crypto-related scams as hackers and scammers target big operators in this niche. Read on to learn more about crypto crime and the various types of crime associated with the virtual currency.

Exchange/ Wallet Hacks

Crypto-trading requires constant buying and selling of cryptocurrencies. That said, Exchanges play a vital role in ensuring that the cycle of operations continues smoothly. Although it is hard to hack through an Exchange system, there is a class of hackers committed to the task and will do anything to attain the loot. E-wallets have inferior security protocols and are susceptible to viruses, which makes them easier targets for hackers.

Money Laundering

In a layman’s language, money laundering is the process of concealing the true origin of funds. In the early days following its introduction, the cryptocurrency industry was marred by many money laundering scandals, a trend that has not deteriorated to date.

Blockchain technology plays a key role in this crime as it is responsible for verifying and recording transactions in the ledger. Criminals use anonymity channels during the verification process, which means it is impossible to trace where the money is coming from. When the source of funds is concealed, it becomes practical to instigate online fraud without fearing the law.

ICO Scams

In a way, Initial Coin Offerings are similar to IPOs, with the only difference being that the former is not regulated. Cybercriminals take advantage of investors who want in from the ground to recoup on their investments but have not done their due diligence to investigate the companies where they intend to invest their hard-earned money. With over 50% of current ICOs branded as a scam, it is best to consult with a professional before dishing out your money.

Corruption

The corruption menace is rooted almost everywhere in the world’s institutions. Since crypto trading is decentralized, it adds another layer of complexity to the already existing predicament. Authorities find it difficult to trace the source and intended recipients of the funds, making it much harder to prosecute any parties on corruption charges.

The Future of Cryptocurrency

It is difficult to say for certain what the future holds for cryptocurrencies but there are some good signs that Bitcoin will take a stronger hold of the gaming industry in the near future. IGT, developer of online slot machines, recently filed for a patent that will allow players of slots at online casinos to transfer Bitcoin from a personal e-wallet to their player account. The ability to play using Bitcoin at casinos is not new but being able to transfer Bitcoin between digital wallets and gaming establishments will open up a new market for Bitcoin. 

The opinion is divided when it comes to cryptocurrency in general, with some people expressing optimism that the technology will continue to grow while others think that it will be around for just a short while. Not all countries allow crypto trading in their jurisdictions. Those that have legalized have implemented strict regulations to secure the future of their virtual economy.

In truism, the technology has the potential to enhance transparency when properly regulated. If businesses continually adapt and use the tech efficiently, crypto’s position in the modern economy will transform for the better to replace the darknet scam reputation.

The solution to the Crypto Crime Menace

The challenges discussed above have not curtailed the growth and popularity of cryptocurrencies but will determine the future development. Proactive countries that allow cryptocurrency trading have come up with certain measures to ensure that their citizens are protected from scandalous personalities.

Countries such as Canada, Australia, and the Isle of Man have amended their laws to secure cryptocurrencies under sections that deal with terrorist financing and money laundering. Countries like Thailand, Bangladesh, China, Lesotho, Colombia, and Lithuania do not restrict the use of cryptocurrencies, although they've banned financial institutions within their borders from facilitating the crypto trade.

Onwards, countries such as Nepal, Bolivia, Pakistan, Vietnam, and Algeria are implementing restrictive measures against cryptocurrencies. In contrast, others such as Qatar and Bahrain allow citizens to transact outside the country but not locally. There are mixed opinions when it comes to ICOs, with most countries inclined towards regulation, while others prefer not to take chances. 

Essentially, many efforts are ongoing to facilitate crypto trade. Let's be patient and see what the future has in store!