Why are people skeptical about cryptocurrency?
Cryptocurrencies, like bitcoin are supposed to be shielded against fraudulent activities, based on their systems.
But yet, the United States Department Of Justice has started a criminal investigation into the illegal control of bitcoin prices.
Blockchain systems have some security features that cannot be changed or altered.
For example, if a certain amount of bitcoin is sold to a person and the transaction was recorded in the blockchain ledger, no one can force the system to give the money back. The technology itself prevents the transaction from being altered.
But that is true and only true if the transaction happens within the system. Below are few elements of cryptocurrency that makes fraudulent activities easier.
Activities like trading bitcoin like stocks.
This is the primary reason why the Justice Department is investigating the crypto world. Some persons place orders and later cancel them before the deal is finalized without paying a service fee.
There is also wash trading, which has to do with the exploitation of anonymity. Here, one person sets up what appears like a legal purchase and sale deal but actually does it with himself.
This in turn, artificially increases demand and value.
In 2015, a federal investigation discovered that the United States based cryptocurrency company Ripple Lab did not follow the proper anti-money laundering laws and rules about getting accurate customer identification information.
China has banned online cryptocurrency trading because of falsely inflated trading volumes.
The problems will likely shift to other countries that are not regulated.
Cryptocurrencies are revolutionizing global trading activities and for those countries with a lot of trading activities, they need to work together to protect consumers from these fraudulent acts.