Regulators in Texas are sounding the warning alarm when it comes to the use of bitcoin and other digital currencies, a report from The Columbus Dispatch indicates.
The state regulators are offering now-commonplace hazards (with all the governments around the world issuing their own warnings) when it comes to the use of these digital currencies:
“Digital currencies right now are very, very trendy,” Joseph Rotunda, director of enforcement on the Securities Board was quoted as saying. “There’s a lot of buzz about them. It’s really easy to look at the benefits, the positives of digital currencies, without really appreciating these risks.”
Many in the community have learned the hard was what these so-called ‘risks’ are. Just ask the slew of customers that once did business with Mt. Gox, who lost upwards of 700,000 bitcoins in a disaster of epic proportions.
“In many ways, digital currencies operate as ‘online cash,’ only this type of currency is extremely volatile and can disappear the same way your money disappears when you lose your wallet,” securities Commissioner John Morgan said.
And while bitcoin is the most prominent name mentioned in these warnings we’ve been hearing about, it’s not the only digital currency in which these threats of loss, volatility and abuse exist.
“There’s more of them in production right now, in development. It’s a real fertile ground,” said Rotunda.
“Anybody who’s investing in digital currencies is going to be highly dependent upon the securities systems, the infrastructure, the accounting practices, overall business model of whomever they’re entrusting the custody of their investment to,” he added.
Rotunda urges the public to do their due diligence in the person/people promoting a digital currency and to look at things objectively.
“An investment tied to digital currencies may be suitable for someone in their 20s, in their 30s. When you’re talking about a retiree’s nest egg, that may not be something they’d want to subject to this type of a risk,” he said. [source: The Columbus Dispatch]