Bitcoin and other cryptocurrencies have been making headlines recently, mostly laced with warnings that they might be more conducive to fraud than regular currency.
They are scams just waiting to happen, according to some experts. Ponzi schemes and other frauds involving Bitcoin are being investigated across the country, some of them targeting retirement accounts.
The number of daily transactions have been falling in 2018, likely based on the concerns. As the year began, the number was at 421,000. By the end of February, they were down to 191,000, according to the Bitcoin.com website. The price at its peak was in December when it was $19,180.22 per share. Currently, it is worth $10, 869.77. The numbers indicate that a Crypto recession is brewing, experts say.
JPMorgan Chase experts says the possible results of the changing Bitcoin market are not clear, but “Increased competition also may require the bank to make additional capital investments in its businesses or to extend more of its capital on behalf of its clients to remain competitive.” In others words, the banks might have to join Crypto before they can beat Crypto.
Investors are being warned about promoters who promise high returns through Bitcoin arbitrage or trading strategies. Particularly, they should “think twice” before picking up an offer for a chance to get in on “initial coin offerings” in which the investor receives new cryptocurrencies in exchange for an investment of actual money.
People who are technology savvy and connected may be more vulnerable to the potential scams. Many fall for the internet hype without fully understanding the complexities of Bitcoin as mediums of exchange created and stored electronically in a process known as the “blockchain.”
They have no physical form and typically are not backed by tangible assets. Investments are not insured or controlled by a central bank or other governmental authority and cannot always be exchanged for other commodities. Cryptocurrency investments are vulnerable to computer hacking and subject to wild price fluctuations.
Bottom line: Beware of unsolicited sales pitches, guarantees of investment returns that seem too good to be true and pressure to complete transactions in a hurry.