Bitcoin is still relatively new, but it has had a hell of a ride over the past few years. Governments world over have fought to shut down bitcoin exchanges and to ensure that their currencies were protected against the new cryptocurrency. Government agencies were able to shut down several bitcoin exchanges over the past few years, and have worked hard to discredit the cryptocurrency in the eyes of the public. With a weak bitcoin currency that people believe is unreliable, they’d be hard pressed to exchange their dollars for bitcoins, at least in huge numbers.
Bitcoin has seen another hit to its credibility lately—there is now a Securities and Exchange Commission (SEC) complaint that claims GAW Miners and ZenMiner ran an illegal bitcoin mining scheme. The claim is that GAW and ZenMiner defrauded investors to the tune of $20 million in a Ponzi scheme. The investors thought that they’d be getting mining hardware that could mine new bitcoins, but it turns out that the vast majority of investors got substandard technology that could not even recoup their initial investment. The case is currently pending in Connecticut court, and will be sure to make news headlines as it unfolds.
Many bitcoin merchants have bitcoin merchant accounts from credit card processors such as eMerchantBroker.com. Unfortunately, fraud is on the rise in the bitcoin world, and it is difficult to stop. There are no mechanisms or central banks that can insure bitcoins. Dollars kept in FDIC backed institutions are insured by the federal government, so depositors can feel confident that their money is safe. If a computer with bitcoins on it crashes, or the bitcoins are stolen or lost, they are gone forever with no hope of recovery. This has turned some people off to bitcoin. Although the currency has its pluses, such as being able to make unlimited anonymous transactions, one of the major downsides is that your money is not protected. Bitcoin fraud is likely to continue to increase in the near future.