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Is the Cryptocurrency Space Dead?

Is the Cryptocurrency Space Dead?

It took less than a decade for bitcoin to evolve from a novice idea into a worldwide phenomenon. Thanks to the speculative frenzy that began in 2017, which saw the price of a single bitcoin peak around $20,000.

That price has since retracted by about 80%, but there has been no change to its underlying value, and it’s safe to say that the most popular digital currency is now a legitimate financial asset. The same can’t be said for all cryptocurrencies, which is why the volatility of the past year was a blessing for the cryptocurrency space.

More Money, More Problems

The scores of initial coin offerings that popped up by the end of 2017 and the start of 2018 were filled with scammers trying to take advantage of investors hoping to get rich, and those that weren’t outright scams were often far from good ideas. In fact, 58% of all ICOs in the first nine months of 2018 either disappeared, failed to raise money or had to refund participants.

Today, the wheat has mostly been separated from the chaff. The majority of the projects that have survived the current bear market are led by experienced teams working to apply blockchain solutions to real-world problems. As the space continues to mature, we’ll see more innovation, which will attract more sophisticated retail investors as well as institutional money. But challenges still lie ahead.

Many cryptocurrency enthusiasts are pointing to security token offerings as a solution to both ICO fraud and persistent regulatory issues that have kept many would-be investors on the sidelines. STOs aren’t much different from traditional securities except that they rely on blockchain technology — specifically smart contracts — to make processes like paying out dividends or repaying loans more efficient.

Unlike ICOs, which don’t give investors any rights to an underlying asset and don’t obligate sellers to follow through with anything at all, security tokens are tied to something tangible like business profits or revenue. However, STOs aren’t perfect. Sellers can still violate regulations if the security is resold to another party (in practice, once the token is acquired, the holder can do what they wish with it) unless the proper exemption is granted from regulators. Unsurprisingly, the U.S. Securities and Exchange Commission has yet to fully approve many of those that have filed.

That said, the floodgates are open and it’s only a matter of time before cryptocurrency hits mainstream exchanges. Investors can already trade bitcoin futures on the Chicago Board Options Exchange and the Chicago Mercantile Exchange, and the Nasdaq has confirmed that it will be adding liquid indices in late February to track the values of bitcoin and Ethereum.

The current crypto bear market may last well into 2019 (and perhaps even longer), but cryptocurrency is here to stay. If you’re an individual investor or leading a company that is looking to gain exposure to crypto — either by accepting cryptocurrency payments or by including it in employee compensation packages — here are three steps you can take to mitigate risk.

Education

Though lots of people were posing as experts in 2017 and the beginning of 2018, the reality is, there still aren’t tons of people who fully understand the technology underpinning many cryptocurrencies. It’s OK if you’re not an expert. However, there’s also plenty of information available on the real-world value of crypto as well as the financial benefits and risks. Take the time to read it. Especially if you’re going to be investing, you should know what a scam looks like; they’re not unique to crypto.

You should know a little bit about cryptography in general, and you should definitely know that if you lose your private key, someone can’t just unlock your wallet. Likewise, if you’re not an experienced investor, you need to know what’s at stake. As with any investment, you should be willing to face losses. The need to diversify is just as important as with a 401(k) or personal retirement plan. And yes, you’ll have to pay taxes on gains and losses.

Advertise Acceptance

Many of those holding bitcoin is still looking for legitimate locations to spend it. If offering crypto payments to customers, trade it to fiat immediately in order to reduce risk, unless you’re in it for the long haul.

If you’re receiving payments in crypto, you should try to get your vendors to accept such payments, and cash out to fiat only the difference you can’t pay out in crypto. Otherwise, you’re not taking advantage of the real benefits digital currencies’ offer, such as faster and cheaper transactions.

ICO = No No

You could very well be breaking the law. If you’re looking to raise funds with crypto. They have teams of lawyers who will help you each step of the way. That doesn’t mean you don’t have to do your own due diligence. There will always be investment scams, no matter the investment vehicle.

The meteoric rise of bitcoin’s price was largely driven by hype perpetuated by mainstream media, and many inexperienced investors paid a steep price for buying into that hype just as the crypto bubble was bursting. 

Ironically, the same “experts” who were calling bitcoin the next big thing in 2018 are asking if it’s dead in 2019. The answer, of course, is no. The next bull cycle likely won’t see bitcoin prices skyrocket past $20,000 (or even $100,000, as some analysts claim), but cryptocurrency has already proven its value — and its permanence.

Stop Gambling on Stock Options

Let’s face it. The world of investing can seem very intimidating to new investors, especially those getting in the market with little to no experience. Unfortunately, marketers love to get you to buy their “system” on how to become instantly profitable in the market. If you take a step back and really look at the market, the odds of you picking investments in the short term and becoming profitable with them is little to none. You have about a 95% chance of losing money when you begin trading. As we all know, there are different investment vehicles that grow at different rates. One of the riskiest investments out there is what is called binary options. 

The reason why binary options are so bad is that they carry an enormous risk when investing with them. In fact, they are also called “all-or-nothing” options if that helps you figure out what they are all about. Basically, they are marketed toward online gamblers thinking about investing their money. As I said, you should do your due diligence before giving any money to this random options trading site that you came across online. Get other people’s experiences with it to find out if it is legit or not. 

Essentially, this is how a binary option works: When you by a commodity or a stock from a broker, a contract is created between you and the broker. You buy the asset at a fixed price and must hold that asset for a specified amount of time, whether that be five minutes or five hours. In other words, the option must be held to maturity. If your bet was correct, you can win a lot of money. The bad news is that it is really hard to gauge what a stock is going to do within a short period of time, especially a five minute time frame. Mathematicians also broke down the probabilities and found out that you’d need to be right with your bet 54.5% of the time just to break even on your investment! As you can see, this gives the broker an extreme advantage, especially if we’re talking about thousands of dollars transacted. 

All in all, many of these binary options websites are garbage. They are unregulated and in my eyes, very risky. If you are going to get involved with any investment style, educate yourself about it first. Treat it like a business rather than a freaking casino. Find out how you need to approach your education and your investment style so that you can best set yourself up for success in the market. Like I said earlier, the odds are stacked against you in the market as it is. One of the best things that you can do is find a personal mentor, whether that be a professional trader or even a financial advisor. Put your trust in them rather than a scammy binary options website where all they want to do is take your hard earned greenbacks. I hope this article gives new investors a better perspective when it comes to binary options.

Gamblers and Traders Get the Same Thrill From Cryptocurrency

A research study that was conducted by researchers at the Center for Gambling Studies at Rutgers University–New Brunswick showed that there is a connection between habitual gamblers and high-risk stock traders when using cryptocurrency in their respective activities. It showed that due to the accessibility of cryptocurrency, such as bitcoins, its anonymous source, unregulated status, and the adrenal rush of using it, high-risk stock traders and habitual gamblers use the electronic currency to make high bets and to trade risky stocks. The researchers who conducted this study, Devin Mills, and Lia Nower, who is the director of the Center for Gambling Studies, found that over fifty percent of gamblers have traded cryptocurrency on a monthly basis for one year while seventy-five percent of stock traders used the electronic currency during the same time frame. 

Although habitual gamblers would bet for recreation and the thrill of using accessible currency, and stock traders would buy and sell stocks to increase their investments, Nower and Mills showed that there were no differences between these gamblers and stock traders. Both groups are invested in their activities for the thrill and challenge of gaining wealth while taking a chance at losing their current finances. However, as a result, the subjects of the study found that they experienced high levels of depression and anxiety, most likely from losing money in their wealth-gaining methods. 

Nower also maintained that high-risk stockbrokers who traded stocks with cryptocurrency were no different from their peers who didn’t used the electronic currency. High-risk traders and their peers were trading stocks for the same end goal, which was to gain wealth from some great investments, but with a type of currency that they were able to easily obtain. In Addictive Behaviors, the journal where this study was published, Mills reported that some people used cryptocurrency an investment tool, but there are others who rely upon it as a means to bet on gambling opportunities, which could lead tot heir downfall. Unfortunately, with the value of cryptocurrency fluctuating since December 2017, the usage of cryptocurrency may decline, thus making it useless to habitual gamblers and high-stakes stock traders. According to statistics, cryptocurrency was valued at $24,000. However, as of March 2019, it dropped down to $5,174.70. With the value of cryptocurrency decreasing, the chances of habitual gamblers and high-risk stock traders gaining from electronic currency will not benefit them in the long run.

Cryptocurrency exchange WEX/BTC-e tied to Bitcoin ransomware hackers

Cryptocurrency exchanges on the WEX/ BTC are linked to ransomware and hackers according to the latest report. 
Four of the big groups that make up Pricewaterhouse Coopers has release information that Iranian nationalism is behind the SamSam ransomware attack that has affected the cryptocurrency exchange. 
According to the report the creators of SamSam, Faramarz Shahi Savandi, and Mohammad Mehdi Shah Mansouri used their WEX platform and used this money to launder around $6 million during their 34-month extortion fee. 

bitcoin is a scam

The executives at PwC found out about this laundering operation and found that they were responsible for the threat. According to the US Justice Department, there were more than $30 million in damages due to this laundering in the United States and Canada. There were more than 200 victims of this scam including public facilities, hospitals, and even townships. 

What was the SamSam Scam? 

The town men created this program in Iran and used it to encrypt data on the computers of the people that they targeted. They would extort the victims by demanding Bitcoin ransom to unlock the data on their computer and allow a person to have access to it again. The Bitcoin would be sent to their address in Iran. 

What is the WEX? 

This is an online area where currency can be exchanged and was opened after the BTC was closed due to the founder being arrested. Around 95 percent of the random payments went through this unit. 

WEX Connection 

Information about the extortion was found in this exchange platform. The report lists the hackers and the services that have been affected. One of the swaps in cryptocurrency was sent to the United States. Funds were transferred among the WEX users. Those that are being affected have been notified. 


This should be a lesson to those that are working with lesser-known currencies as well. The cryptocurrency may not be examined more closely. The exchange programs that are more popular and well established will have compliance programs and codes that the smaller ones may not have. These programs may be able to find illegal activities happening. 
There have been criminal groups that have tried to use Bitcoins for illegal activities in several countries. If there are no rules, a company is 36 times more likely to be victim to scams. The report recommends that a person should not make payments to those holding their computer ransom if there have been no threats made to their life. Paying the ransom will encourage this activity to continue. There are the legal measure that can be taken if the authorities are contacted.

Google Announces Play Store Ban on Binary Options

Google has finally banned binary options from its Play store. A binary option is a type of option in which the customer must state whether a given asset will be above a certain price by a specific time. Because it is virtually impossible for an investor to trade with an edge, binary options are regarded as a form of gambling by many. These firms appeal to individuals who are familiar with other forms of options trading, but many be unaware of the low success rate with this type of trading. Google’s ban, however, comes on the heels of other restrictions placed on financial apps available in its store, and follows other actions taken by regulatory bodies and other companies. 

Google’s ban was prompted by an investigation carried out by the Australian Competition and Consumption Commission. The Australian authorities advised Google that they had uncovered evidence of hundreds of millions of dollars in losses which were unaccounted for as a result of these investments, which are provided by firms that operate with relative anonymity. Other countries have undertaken similar investigations into brokerages that provide binary options trading. 

As part of the ban, Google reserves the right to remove or place restrictions on apps that facilitate transactions that may be deemed extremely risky, such as CFDs (Contracts for Difference), cryptocurrency applications, and Forex spot trading. In addition to the ban on binary options, Google affirmed that it would continue to remove applications that facilitate counterfeiting and fraudulent activity. 

Google’s policy announcement should not come as a complete surprise, as the search engine had already announced a ban on related ads in its Adsense advertising service. Adsense, which allows advertisers to target potential customers through Google’s search results, has tightened restrictions on financial products. In fact, as of June 2018, only authorized advertisers are allowed place ads related to trading. 

One of the first jurisdictions to prohibit binary options was Israel, which argued that this instrument is a form of gambling and not a legitimate type of investment. The ESMA followed suit in December 2018, reissuing restrictions on binary options trading in Europe. Apple had already taken action before Google, banning binary option apps in 2018. Moreover, Facebook had previously prohibited advertising related to binary options in January 2018. In addition to Google’s tightening of its position, it is likely that other restrictions may follow on other platforms in the near future.

What to Know to Avoid Tax Scams

The Treasury Department is well aware of all the tax scams that are going around, however, many residents aren’t aware of this problem and may give away their information as well as a large sum of their money to people who are pretending to be the IRS. The Treasury has found that the incidences of these scams happens the most in the summer, probably due to people going on vacation, not wanting to be bothered by taxes that they may or may not owe and having relatives who are staying with you answer the phone. Being aware of these scams and knowing how to avoid them is important when it comes to safeguarding both your identity and your finances. 

What Are Tax ScamS?

These scammers will often call your house line or your cellphone and tell you that you owe a large sum of money to the IRS in the form of back taxes. They claim that you have not paid the tax and that if you fail to pay, you will be arrested. Many of these scammers even scare residents saying that if they do not pay immediately, that police are on their way to arrest them. If you aren’t aware that this is a scam, this can be an incredibly frightening phone call to receive. No one likes to be told that they are going to be arrested for something they’re not even aware of. Because so many people don’t understand how the IRS actually works, they may fall for this scam and send the scammer money. 

What to Look For

One thing to look for when it comes to a scam is that it’s done over the phone. The IRS will never contact you by phone, instead conducting all of their business by mail that is stamped and certified. The IRS will also not threaten to arrest you, especially if you haven’t even gotten the chance to work closely with them to develop a payment plan. The IRS isn’t the enemy, since they will often work with people to develop payments that they can afford on back taxes before even considering getting police involved. Next, you’ll notice that the form of payment that these scammers often want is through money transfers and gift cards. The IRS will never accept payment for any unpaid tax with a gift card to a store. Be aware that these scammers not only demand payment for unpaid taxes that they expect immediately, but they also strive to gain personal information to steal your identity, so be careful not to give these people any information over the phone. 

Alert the IRS

If you suspect that you’ve been scammed or that you have been contacted by one of these scammers, it is important that you alert the IRS through their proper telephone number. You can give them information pertaining to the number that called you as well as any names that the scammer used, and they will be able to help catch these criminals so that they do not scam anyone else of their hard-earned money.