The 3 risks of cryptocurrencies

The risks of cryptocurrencies are several. Not all that glitters is gold. The world of cryptocurrencies has been making a lot of headlines in recent months. After a period of expansion where those who invested many years ago have been able to become millionaires, it now seems that the fever has passed. And it is that what seemed like manna from heaven, has its risks and problems.

These are some of the main problems and risks of cryptocurrencies

1. Malware.

The first of them were created at the time of the emergence of electronic payment systems (WebMoney, QIWI, etc.). Now your analogs they are tailored to the cryptocurrency market and can be activated wherever that opportunity arises.

The most common methods to steal cryptocurrencies are: Data hijacking; virus; fake links (substitution); phishing (unauthorized access to personal information). Owners of digital money should be extremely vigilant and try to stay one step ahead of malware: use reliable antivirus protection, check all addresses, and don’t follow suspicious links.

2. Hacker attacks.

The cyber attacks they are the second biggest problem and a common occurrence in the world of emerging cryptocurrencies. Cases of hacker attacks are becoming more frequent and fraud methods are becoming more sophisticated.

Bitcoin wallets and the large amounts in circulation have become especially attractive to thieves. Cryptocurrency exchanges have been repeatedly hacked, as a result of which many have closed due to bankruptcy.

The International Securities and Exchange Commission has confirmed that more than half of the platforms have suffered cyberattacks. For example, in 2016, due to a bug in the code, hackers gained unauthorized access to the digital wallets of DAO hedge fund participants and stole more than $150 million.

According to experts, the problem of security in the world of cryptocurrencies will haunt the heads of investors for a long time. Experts are skeptical of any idea that can supposedly solve the security problem. They believe that no current technology or mechanism is yet truly capable of protecting cryptocurrencies from attacks and manipulation by hackers.

3. Lack of legislation and legal risks.

The situation is aggravated by the lack of an insurance system for investors. They cannot claim damages, even though some exchanges position themselves and operate as virtual banks.

Bitcoins are intangible digital codes that do not have proprietary rights. If they are stolen from a virtual wallet, the owner cannot identify the thief (due to anonymity and decentralization) or prove his right to those coins (due to the lack of personal property law).

The situation is similar in the event that the transactions are carried out on behalf of an unscrupulous party. And if the bitcoins are invested in a company that went bankrupt, the owner will also not have the opportunity to return them, since the contract was concluded “on probation and a handshake”.

However, investors currently have no choice but to do business with exchanges that do not have registered capital to insure losses, such as conventional banks, whose activities are regulated by law.

Experts stress that when a bank account is hacked, there is always a third party ready to step in to fix the problem. But this does not apply to cryptocurrency exchanges. Most likely, due to the “virtual” characteristics of digital currencies, they are never completely secure. Nobody offers insurance for cryptocurrencies, although there are many projects in development.

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