For quite some time I have been bearish on the long-term ability of Bitcoin to continue increasing in value, for a number of reasons.
Listing the headwinds for cryptocurrencies such as Bitcoin would simply take too long, so in this article I'll focus on only one: the permeable nature of cryptocurrency exchanges and the risks cyber-crime have on this sector.
First of all, much of the money floating around on the ether which ends up in Bitcoin-related transactions has been known to be dirty money.
Whether we're talking about drugs, hiring a gunman, or funneling money of corrupt politicians out of countries with capital controls, the fact that cryptocurrencies such as Bitcoin remain unregulated mean that the average user is perhaps less scrupulous than the average equities investor.
I am always amazed at how Bitcoin is compared to various equities or fixed income investments, when in fact the majority of the trades which are made are by those with motives which are, perhaps, dangerous for society as a whole.
The fact that many of these exchanges are used by criminals may not come as a surprise to many, however the ability of criminals to hack these exchanges and steal the money of hardworking folks who have put their life savings (perhaps foolishly) in Bitcoin is reprehensible.
Last week's hack of Coindesk in which an estimated half-a-billion dollars' worth of Bitcoins were stolen is just one of many heists in the past, and a trend which is likely to continue moving forward.Invest wisely, my friends.