Digital Currency: What are the risks? Part 2

by in Tax Advice Information and Updates
Digital Currency: What are the risks? Part 2
In this 2nd part of our blog series on the risks in using digital currency, we’ll look at 3 more risks that you have to be aware of to be able to protect yourself when you do get into buying and using Bitcoin or any other type of digital currency.

Exchanging your digital currency may prove to be challenging. Digital currencies can be difficult to buy and use. It is not easy to exchange them for cash or purchase goods and services. Right now, there are very few merchants that accept digital currencies and they are not required to exchange your digital currencies for traditional currencies such as the Canadian dollar.

You may be exposed to fraud. Digital currencies are very prone to fraud, theft and hackers. There have been several incidents where scammers have used digital currencies to deceive the public. In addition to this, all transactions are recorded to a public ledger called blockchain where all your information such as transaction amounts, wallet addresses and your public keys are stored. And if we’ve learned anything from the recent news about Yahoo and Equifax, anything online can be hacked nowadays. In addition to this, there are some instances where digital currencies are used to support illegal activities.

Transactions are not reversible. Any purchases or transactions you make using digital currencies are not reversible. You can’t reverse the charges should you not receive the product you bought with digital currency. You can’t get your money back unless the seller agrees. And you may not be able to stop a payment.

As mentioned on the first part of our blog series, anything you do online has risks. It is a matter of being aware and vigilant when using digital currencies. It is your responsibility to know how to protect yourself.

Source: https://www.canada.ca/en/financial-consumer-agency/services/payment/digital-currency.html
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