[Note: While the context in this article focuses mainly on Bitcoins, but speaks also of its alternatives such as Litecoin, Dogecoin, Peercoin, and others.]
ForexMinute.com – It is indeed bad news for investors that the lawmakers don’t have any significant role in bringing back their lost virtual currencies. A few months ago, the world’s largest Bitcoin exchange Mt. Gox went bankrupt owing to an “alleged” DDoS attack. The trend of getting attacked was further followed by several other virtual currency exchanges, with the latest being the Canadian exchange Flexcoin, that was closed after claiming to have lost 896 Bitcoins – around $60,000 – to a digital theft.
However, it is still quite difficult to calculate the exact worth of Bitcoin lost due to the currency’s extreme volatile nature.
The Crazy Aftermath of Digital Coin Robberies
After such events, digital currency investors – both individuals and companies – normally end up with nothing but a piece of slogan in their hands, which say “Where is our money?” The problems that come with the bankruptcy of digital currency exchanges is the involvement of uncertain and manipulated risks. The government’s response to these matters normally contains an “Investment at Your Own Risk” tagline, which further mocks the investors to trust an entity that was never approved by their own financial supervisors in the first place.
“Anyone who has invested in Bitcoins has done it at their own risk,” says Raul Rubio, Information Technology partner with Baker & McKenzie. Experts from European Union also blames it on the lack of proper issuer of such digital currencies, which makes them incapable to support investors.
Match Jorge Moncliis, Senior Associate at DLA piper Global Law Firm, says that investors cannot really put their cases against digital currency exchanges, since the digital currency itself operates outside the regulated financial markets and therefore intermediaries “are not considered or controlled by any other body.”
Can we then agree to a word called ‘scam’? Experts don’t think so. Rubio further expresses that the Bitcoin operators will publicly boast the success of this currency because its independency makes its impossible to seek redress in court for fraud.
Moncliis, on the other hand, gives a little optimistic view, saying that a contractual claim must be made between the operator and the investor. He although doubts it to be 100% effective, because of the lack of legal certainty and the fact that intermediaries declare bankruptcy.
Can a Virtual Controller Help?
The concept of a virtual controller was first pitched by Japan, and is now the first country to have progressed for achieving the same. However, most of the countries are still uncertain about their stand on virtual currencies, and are orchestrating their laws with a snail-like speed.
Encouraging Complimentary Currencies in Times of Economic Crisis
Complimentary and virtual currency are almost the same thing. The alternatives do not actually replace the national currency, as most of the governments fear, but simply become a mean of payment in certain areas, which usually include local trades.
In Spain, there are currently more than 70 alternative currencies in existence. These currencies are although unregulated, but if experts try to legislate them under a definite law, even its limited use can ensure no frauds.
However, a certain guarantee should also be asked from the promoters of alternate currencies. A kind of contract, limit or obligation cleared can help ensure the better functionality of this emerging payment system.
To contact the writer of this article: Yashu Gola at firstname.lastname@example.org