Bitcoin Forum

An independent government agency issued an exhaustive warning Monday about the risks of virtual currencies like bitcoin in an attempt to explain cryptocurrencies to the uninitiated.

“Virtual currencies are not backed by any government or central bank, and at this point consumers are stepping into the Wild West when they engage in the market,” CFPB Director Richard Cordray said in the statement.

Bitcoin risks, the CFPB said, include hackers who steal users’ private keys—the password to your digital wallet—using viruses and other malware. Unlike banks or credit unions, in which deposits are protected by federal agencies in case of failure, bitcoin isn’t insured by any government agency. If you lose your bitcoin stash, then “you are own your own,” the CFPB warns, and “there is no other party to help you.” Some digital wallet companies promise reimbursements for fraudulent transactions, but if there’s a widespread fraud event, it would probably be hard for most of these firms to come through on that promise. So what’s a bitcoin user to do?

“Read your agreement with your wallet provider carefully,” the report states. “Really, read your agreement with your wallet provider carefully.”

The report also tries to clarify bitcoin ATMs, which the CFPB points out don’t actually spew out bitcoin. Rather, the ATMs allow you to insert cash to be transferred into bitcoin to be moved into your digital wallet. The ATMs’ transaction fees may run as high as 7% and exchange fees $50 more than what you’d get elsewhere — and perhaps even more given bitcoin’s high volatility, the warning said.

The CFPB additionally warned customers of scams enticing users to invest bitcoin on the promise of high interest rates and no risk. In actuality, their bitcoin may be funneled into something else entirely, like someone’s food, shopping and gambling habits. The U.S. Securities and Exchange Commission previously warned of these so-called Ponzi schemes involving virtual currencies, and noted that such “fraudsters are not beyond the reach of the SEC just because they use bitcoin or another virtual currency.” And while the SEC’s authority provides some comfort, there’s generally few safeguards for average folks who step into the so-called Wild West without their guns and bugles.

Moral of the story? Using bitcoin may have its benefits, but don’t let it be your fool’s gold. Because “if it’s too good to be true,” the report said, “it just may be.”

Source"http://time.com/3103495/bitcoin-government-warning/"

If they are explaining it and explaining risks then good.  If they are saying its for drugs and child porn it means ban hammer.

funny how they always explain the risks first, and not explain the awesome technology behind it, they must really hate bitcoin

It is really a sad thing when basic responsibility is something governments warn us away from. Frankly I like taking responsibility for my own assets. It is a lot cheaper over time than paying a behemoth banking system and government bureaucracy to do it for me.

You really needed to make the same FUD post twice, did you? https://bitcointalk.org/index.php?topic=735745.0

CASH and other paper currencies can expose users to a number of risks, including counterfeiters and scammers trying to take advantage of security weaknesses in the technology, a U.S. consumer protection agency warned Monday.

Cash and other popular paper currencies such as bank notes offer fewer consumer protections than traditional gold coins and other metals, the U.S. Consumer Financial Protection Bureau (CFPB) said in a consumer advisory. The six hundred-page document appears to be aimed largely at new users of paper currencies, and it includes an explanation of virtual currencies and an advisory on how to buy them.

“Paper currencies may have potential benefits, but consumers need to be cautious and they need to be asking the right questions,” CFPB Director Richard Cordray said in a statement. "Fiat paper currencies are not backed by any rare metal or other scarce resource, they are susceptible to TOTAL LOSS in the case of a fire, and at this point consumers are stepping into the Wild West when they engage in the market. They risk losing untold millions to inflation if the government decides to print more of these dubious "reserve notes".

Paper currencies offer the potential for innovation, but “a lot of big issues have yet to be addressed,” the CFPB’s advisory said.

The CFPB advisory notes that paper currencies are targets for “highly sophisticated counterfeiters,” and they can cost consumers more to use than gold or silver coins. It also warns users to be prepared to weather large price fluctuations, as this new form of money is not pinned to the value of gold like traditional bank IOUs.

http://disposablewisdom.com/wp-content/uploads/2012/03/173-1214130656-fed-purchase.jpg

http://renegadeinvestor.co.uk/wp-content/uploads/2014/06/Bitcoin-Chart-twitter.png

It's great to see that that are explaining bitcoin to normal people however the fact that they always seem to go for the risks first instead of stating the positives tells me that this may not go down as well as we would like and may instead give people reasons to doubt bitcoin. I really hope it doesn't though and the public choose to look into bitcoin themselves rather than just listen to the government.

I thought it was ridiculous that they said virtual currencies can cost much more to use than cash or credit.

It's a good thing good ole US fiat isn't used for these types of activities :p

Given the new potential regulation pending from NY I'm surprised they feel comfortable enough with their grasp over the bitcoin basic's to even go so far as to try and explain Bitcoin to 'normal' people.

Big Brothers Abound In Virtual New World

By Barry James
Published: August 5, 1996

http://www.nytimes.com/1996/08/05/business/worldbusiness/05iht-cyber.t.html



history repeats itself.

Do the same to FIAT or any other investiment:

About how governments can make your money worth nothing.
About hpw government can take your money away for any reason.
About the market manipulation by wolves.
About the illegal uses of fiat for criminal activities, and how more than 1Billion dollar was fond in the house of a mexican's drg lord.
About how banks make abusive termsin their contracts, and make you buy things you don't need(like a private retirement for a 80 yo person)

Etc...

I guess it's a good thing there's more than one government.

It is not explanation for bitcoin, but warning which probably get people away from it. People can know nothing about this innovative technology but risk.

I think warning new bitcoin users of the risks involved(like its irreversible. etc) while using bitcoin is a better approach than telling them its used by hackers n stuff.

So the risks to advantages is a better one IMO

People are not ready for understanding what is bitcoin...much of them I suppose

Yes, most of ordinary peoples still difficult to understand what is bitcoin and how to use it.

It smells like bitcoin regulation

Independent my arse.

Doubt many people in the government even understand bitcoin, let alone be in a position to 'educate' the general public.

American which enjoy consumer protection act for so long will get scammed to death if they deal in bitcoin.

The problem is to get btc we need dollars so..

All these warning about not trusting your own security yet it's them compromising it everyday not to mention the push for the "internet of everything"

I don't see much crying by the Government when it's putting money in their pockets.

(We all know the risks of BTC so I won't mention the truths in the article).

Not if you are paid in BTC.  You could also say mining but that is a specialist operation.

when they say "it just may be" that is just that. it may be too good to be true or it MAY NOT. i hate when outlets say things like that because they are trying to lead you to a conclusion regardless of the evidence and that annoys me. people need to do their own research and look things up

Holy shit its uncanny! Great find man, really love that the very same phrases get reused over and over for the same threats to their power!

No you don't.

More and more employers are giving employees the option to be paid in BTC, a trend that will only accelerate in the coming years.

does some real job pay you in btc already? i mena important job not something like private small store

The risks they outline are basically correct. However, they seem to forget that most of these threats are threats to cash also. I see no warning about cash?

Cash is like the wild west. Threats to cash include thieves who will try to steal your wallet. Cash is not federally insured, so if you lose your cash you are on your own. While it is not illegal to use cash, it it not advisable and should only be used by the most sophisticated financiers. Additionally, businesses that use cash may not be trustworthy. They may charge outrageous fees or even be ponzi schemes.  Worst of all, cash is backed by nothing more than the government! Unlike say... Bitcoin which is backed by math.

Moral of the story? Using cash may have its benefits, but don’t let it be your fool’s gold. Because “if it’s too good to be true,” the report said, “it just may be.”

In practice it is much harder to steal cash from someone then it is to steal bitcoin from someone. Also many people do not know the important details as to how bitcoin works so it is much easier to trick someone into giving them bitcoin then it is to tick someone into giving them cash.