Cryptocurrency was a term that was almost as viral as “just looking like a wow” is now when it exploded across the world in the pandemic era. Everyone was curious as to what this was. We had millions of people from all over the world investing in this concept. So, what is this new and shiny term called cryptocurrency? It is a digital currency, an alternative form of payment created using encryption algorithms. Using encryption technologies means that cryptocurrencies function both as a currency and as a virtual accounting system. (CTS - SUNY Oswego). Investing in this was rather exciting because of the constantly changing market. However, recently, this market has taken a huge hit. The details of this debacle have been uncovered step by step.
The year began great in the world of cryptocurrencies, although the prices were much lower than the all-time high that they had been at previously. The crypto market is always highly volatile and unpredictable. There were some signs of stability last month due to US inflation. High inflation rates may lead to more investments in digital currencies to relieve fears over their decree losing value as time goes on. However, we are all aware that anything that happens online is bound to have some chances of being fraudulent somehow. Cryptocurrency is no different. There is a company called FTX (Futures Exchange), which was once valued at $32 billion. It collapsed in early November 2022 after CoinDesk reported that an affiliated trading firm, Alameda Research, derived most of its value from speculative cryptocurrency tokens. This incident caused the entire crypto market to take a massive hit, making all the prices go haywire. They filed for bankruptcy with over 8 billion dollars worth of investor’s money missing and 400 million dollars stolen by hackers. Upon further research, it has been discovered that 286 million dollars have gone missing in the UK, all attesting to crypto fraud.
Experts like Lewis Duke, a senior cybersecurity software firm Trend Micro employee, believe that the downfall does not end here. One bitcoin was trading around the $44,000 mark at the start of March 2022. Twelve months on, it is worth about $24,800. He explained how this is the best-case scenario for fraudsters. They can keep doing what they do and constantly reduce the monetary value of all digital currencies so that it would cause huge losses if taken offline. They usually defraud the public by calling vulnerable people and pretending to be the staff of a site that seems to be down. They ask for their personal information, pretending to be helping them, and then taking away everything they have. If we look at the bright side of this disastrous situation, companies know how to deal with fraud victims much better. Earlier, it used to take them months on end. Now, they are significantly faster and wiser about it.
The FTX fraud has made it abundantly clear that we need a clear set of rules. They are being actively formed as we speak to make investing in crypto safer. Andrew Parsons, a partner at law firm Womble Bond Dickinson, claims that the UK could emerge as a leader in legitimate cryptocurrency transactions due to this. They are now obtaining a registration with the FCA ( Financial Conduct Authority). Going ahead with this will instantly provide intense security to the crypto investors as this will significantly help with money laundering. Doing this doesn’t improve matters much in the short to medium term. Neither does the new level of cooperation with investigators, which is applicable only once an investor has been scammed.
Should the public even bother investing in such a risky market, then? Well, as is the case with everything in life, don't put all your eggs in one basket. The most important part is to invest only a tiny amount, which, even if lost, will only throw you off a little and not all your life savings as the market is highly volatile. Make sure that you research and analyze before investing. After deciding the cryptocurrency you will invest in, it’s time to find a suitable crypto exchange platform. After you purchase the crypto coins, store your currencies safely as they are not managed, and it is the investor's responsibility to keep them safe and away from hackers as well as theft. Selling cryptocurrency is as crucial as purchasing as it helps you make money from investing. You can fully or partially sell your crypto investment based on your choice, but don’t forget to book your profits. If you play your cards well, this is a fabulous investment market.
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