According to CoinDesk and Business Insider, a Bitcoin exchange company named GBL which was holding $4.1 billion worth of Bitcoins for 1,000 people has disappeared off the face of the planet. We’ve been somewhat quiet about the new internet phenomenon/currency for awhile but I think now’s a good time to let any potential Bitcoin buyers know that they need to be very careful what they spend their money on. Especially with a renewed increase in Bitcoin interest since they’re now at a record high due to Chinese investments. Here are a few examples why:
• 18 of the 40 Bitcoin trading platforms set up in the past three years have closed, including TradeHill, which was once the second largest in terms of transaction volume.
• 13 of the discontinued services closed without any prior notice, while the remaining five were forced to shut down following hacker attacks. Only six of them were known to have offered refunds to users.
• An Australian Bitcoins Bank “Tradefortress,” closed with $1 million missing. The “Bank” wound up being run by an 18-year-old who lived in an apartment.
GBL is only the most recent instance of an already shady (and honestly confusing) online currency screwing people over. Not only did GBL obtain zero of the usual business licenses legally required to operate a financial services company, they listed their address as being in Hong Kong when in fact they were in China.
Money’s not something we really talk about here on COED (unless we’re trying to figure out ways to spend it) but I’ve been seeing a lot of talk recently on Facebook about people trying to mine Bitcoins so I thought this would be a good time to chime in.
Yes, the currency is at an all-time high. Yes, there’s a real chance that they can end up being an incredibly useful tool in the future. But like all investments, it’s very very very important to do due your diligence. 1,000 people just lost an average of $4.1 million because some sketchy Chinese company just disappeared.