What experts say about cryptocurrency, bitcoin concerns
In July, a widespread Twitter hack compromised many celebrity accounts – including that of President-elect Joe Biden, former President Barack Obama and Tesla CEO Elon Musk, to name a few – in a bitcoin scam. As a result, hundreds of thousands of dollars in bitcoin had been transferred under false pretenses.
For many, this prompted questions around the safety of bitcoin.
“There have been multiple examples of bitcoin theft and fraud that I think would give pause to the average investor, particularly if you were going to invest a substantial amount. I think those are legitimate fears,” Ledbetter says. But he also finds them “overblown.”
Because while bitcoin allows for users to transact without revealing personal information or identity (potentially making fraud easier), it’s not totally anonymous. Each bitcoin transaction is documented on a digital ledger called the blockchain, where a user’s cryptocurrency “wallet” is represented as a unique series of random numbers and letters. Through this, a scammer could potentially be traced after the fact.
“I always remind people that bitcoin literally has a public ledger,” Pompliano says.
Plus, bitcoin is extremely hard to hack thanks to blockchain.
“To hack it, you would have to take over the network, and to take over the network, you would need your own network of computers running 24/7, and to do that, it would cost billions of dollars,” according to Paul Vigna, markets reporter at The Wall Street Journal.
Ledbetter also points out that a traditional stock account with a brokerage could be compromised too. “There’s always some potential for fraud or security risk.”
The safest bet is to use a trusted brokerage, experts say – “these established places have a good security protocol and a quick application to protect,” Ledbetter says.
All in all, “things happen,” he says, “but when you look at the big stories of theft, they tend to be institutional and kind of on the fringes.”
According to the Federal Trade Commission (FTC) website, cryptocurrency scams are “a popular way for scammers to trick people into sending money,” and most scams can “appear as emails trying to blackmail someone, online chain referral schemes, or bogus investment and business opportunities.”
“It’s not like there’s something intrinsically unsafe about bitcoin itself– it’s more how people are handling or managing it,” Ledbetter says.
This content was originally published here.