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segunda-feira, 15 de setembro de 2014

Who's Got Your Back On Bitcoin Deals?

You know there are problems out there when a government watchdog agency says it’s “accepting complaints” on digital currencies.
That’s government speak for “we think this is a huge problem and we ought to investigate it.” That means digital currencies are still on the fringe of legitimacy and you need to be careful, according to latest consumer advisory from the Consumer Financial Protection Bureau.
The CFPB is concerned about Bitcoin and other digital currencies. As more and more vendors accept it, this unregulated currency has come under scrutiny. Who controls the supply of it? Can hackers steal it easily — as they’ve done in the past two years? Who’s policing it? What about people who hide assets in Bitcoins during a divorce? Can you do that? These are all unanswered questions.
While I’m all for the emergence of digital currencies, they won’t work without independent regulation. Here’s what the CFPB had to say:
“Virtual currency companies are springing up around the world to offer products and services to consumers. There are virtual currency exchanges, which are companies that help consumers buy or sell virtual currencies. They are designed to be an alternative to current payment systems. Better-known virtual currencies include Bitcoin, XRP, and Dogecoin. They are a way for people to track, store, and send payments over the Internet, and they may have the potential to make payment processing cheaper or faster.
But they are not backed by any government or central bank. In addition, because virtual currency accounts are not insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund, if a virtual currency company fails – and many have – the government will not cover the loss.”

Warnings About Digital Currencies
English: Total Bitcoin supply over time. Start...
Total Bitcoin supply over time. (Photo credit: Wikipedia)
  • Exchange rates are volatile and costs unclear: The exchange rate of Bitcoins to U.S. dollars in 2013 fell as much as 61 percent in a single day. In 2014, the value of Bitcoins has dropped by as much as 80 percent in a single day. Consumers who buy virtual currencies should be prepared to weather this kind of volatility.
  • The Federal Reserve doesn’t back Bitcoins. Nor does the U.S. Treasury, since this is not a government-issued currency. They are worth whatever the online exchange says they’re worth.
  • Consumers should also consider whether there are mark-ups or other fees when using an exchange or digital wallet provider. Companies may be charging consumers to buy, spend, or accept virtual currencies.
  • Hackers and scammers pose serious security threats: Virtual currencies are targets for highly sophisticated hackers and scammers. Individuals, digital wallet providers, and exchanges are all at risk. For example, if a hacker gains access to a consumer’s Bitcoin “private keys,” which are 64-character codes that unlock the consumer’s funds, the consumer can lose all their virtual currency.
  • Fraudsters are also taking advantage of the hype surrounding virtual currencies to pose as Bitcoin exchanges, Bitcoin intermediaries, and Bitcoin traders in an effort to lure consumers to send money, which is then stolen.
  • Companies may not offer help or refunds for lost or stolen funds: Some virtual currency companies do not identify their owners, provide phone numbers and addresses, or even specify the country in which they are located. Before using a company’s products or services, consumers should carefully consider if they know how to contact the company in question, and if they know their contractual rights.
  • Who’s Got Your Back on Bitcoin? If a consumer trusts a company to hold their virtual currencies and something goes wrong, the company may not offer the kind of help the consumer would expect from a bank, debit card, or credit card provider. In fact, some virtual currency companies disclaim responsibility for consumer losses if funds are lost or stolen.
As you can see, there are far too many unknowns in digital currencies. Some day they might prove to be a viable alternative to cash, but not before there’s some oversight on how they are circulated and created. In the interim, if you have a problem with them,contact the CFPB. They are the only cop on this beat at the moment.

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