Consideration

Cryptocurrency Chaos: Cautious

OVER the course of three articles, I have provided a comprehensive introduction and meticulously enumerated the reasons that render cryptocurrencies an unfavorable investment choice. The second and third segments of this series delved deep into the inherent issues of extreme volatility and the prevailing absence of regulation in the crypto landscape, respectively. Moving forward to Part 4 of this series, we will delve into the third key reason that illuminates why cryptocurrencies might be considered a less desirable investment option.

While it is true that cryptocurrencies have gained significant popularity over the past few years and touted as an alternative of investment, however, they are not without their issues, particularly when it comes to security. One of the biggest concerns surrounding cryptocurrencies is their susceptibility to hacking and the potential for funds to be sent to the wrong recipient.

These security issues, along with a lack of consumer protection, make cryptocurrencies a highly risky investment, and it is one of the reasons why several experts in investments and personal finance caution against putting money in what is touted as a new but untested asset class. This article will explore the security issues associated with cryptocurrencies and why they make crypto a bad investment.

One of the most prominent security issues with cryptocurrencies is the risk of hacking. Cryptocurrencies are stored in digital wallets, and these wallets are vulnerable to hacking, just like any other computer or internet-connected device.

Hackers can gain access to digital wallets and steal the funds stored within them. In addition, cryptocurrency exchanges, where users buy and sell cryptocurrencies, are also vulnerable to hacking. If a cryptocurrency exchange is hacked, the funds stored on the exchange can be stolen, and there may be no recourse for users to recover their lost funds.

The Mt. Gox breach in 2014 serves as a critical case study in understanding the security risks affiliated with cryptocurrencies. As one of the leading cryptocurrency exchanges at the time, Mt. Gox fell victim to a massive hack resulting in a loss of 850,000 Bitcoins, valued roughly around $450 million back then.

This incident, marked as the inaugural substantial breach in cryptocurrency history, underscores the inherent vulnerabilities of digital wallets and cryptocurrency exchanges. Almost a decade later, the problem has unfortunately persisted rather than abated.

In 2022 alone, it is reported that users suffered losses approximating $20 billion from a series of high-profile hacks. These include significant breaches on platforms like Binance

($570 million), the Ronin Network, the backbone of the popular Axie Infinity game ($625 million), the illfated FTX exchange, ($600 million), Wormhole ($325 million) and Wintermute ($162 million). A standout episode involved the decentralized platform Beanstalk where a shocking $162 million was siphoned off in a staggering 13 seconds, emphasizing the relentless and sophisticated nature of these cyber-attacks.

Another security issue with cryptocurrencies is the potential for funds to be sent to the wrong recipient. Unlike traditional investments where transactions can be reversed if the wrong recipient is identified, cryptocurrency transactions are irreversible. This means that if a user mistakenly sends funds to the wrong recipient, there is no way to recover those funds. This lack of consumer protection makes cryptocurrencies a particularly risky investment for individuals who are not familiar with the market and who may make mistakes when sending funds.

The security issues associated with cryptocurrencies also make it difficult for individuals to recover their funds if their digital wallet is lost or stolen. Unlike traditional investments, where lost or stolen funds can often be recovered through insurance or other means, there is no such protection for cryptocurrency investors.

This lack of protection for the investing public makes cryptocurrencies a risky investment for individuals who do not even have the technical knowledge to properly secure their digital wallets and who may be susceptible to losing or having their wallets stolen.

In summary, the security issues associated with cryptocurrencies, including the risk of hacking, the potential for funds to be sent to the wrong recipient and the lack of consumer protection make cryptocurrencies a highly risky investment. Despite the potential for high returns, the risks associated with cryptocurrencies, such as those mentioned above, cannot be ignored.

Investing in cryptocurrencies may be tempting, but it is important to remember that the security issues associated with crypto can result in significant losses, making it a bad investment especially for those who value stability and most especially security in their investments.

Atty. EnP, Zigfred Diaz, RFP, ReA, ReB and CSS, is a Cebu-based registered financial planner of RFP Philippines. Aside from practicing law, he is a licensed environmental planner (EnP), realestate broker (ReB) and appraiser (ReA). To join the 103rd Registered Financial Planner program this September 2023, e-mail info@rfp.ph or text 0917-6248110.

By Cai U. Ordinario @caiordinario

DESPITE global supply chain disruptions, small-scale and medium-sized businesses (SMBs) in Asia and the Pacific remain keen on going global, according to cross-border payments-platform operator Payoneer Global Inc.

Based on the results of Payoneer’s regional survey, majority or 73 percent of SMBs in the region believe expanding globally would make their businesses resilient even if only 13 percent of them considered globalization as their priority.

More than half or 53 percent of SMBs in the region are focused on increasing revenue growth while 39 percent are focused on profitability. About 43 percent want to improve customer satisfaction. Only a third or 30 percent of SMBs would like to priori- tize expanding their customer base.

“Going beyond borders presents a world of growth opportunities, untapped markets, and diverse talent. Those who dare to leave their comfort zones create a better future for themselves, their community, and the economy,” Payoneer Country Manager for the Philippines Monique Avila said.

The data showed that despite the lower priority accorded to globalization, SMBs in the Asia and the Pacific (APac) are on track for global expansion.

Payoneer said the customers of SMBs are now composed of international consumers at 43 percent and 40 percent of their vendors are international. While their customers and vendors are still largely local, the company believes there are indications that the split is expected to even out in the next two years.

The data showed that the revenue earned from exports grew from an average of 52 percent in 2021 to 61 percent in 2022. This is expected to continue growing to an average of 69 percent in 2023.

In the Philippines, SMBs are expected to enjoy a 16 percent increase in revenue growth from exports. They are also one of the most optimistic about their business outlook.

“Those who are already operating internationally have reaped the benefits of today’s global economy,” noted the New York, US-headquartered firm.

Payoneer said, however, that while SMBs benefit from global expansion, they also face barriers. Businesses in APac are more likely than others to have been hurt by global events in the past two years, it added.

This is particularly true for the Philippines, which is among the most negatively impacted by these events. The country suffered under the weight of global supply chain disruptions.

Cross-border trade is another challenge with issues related to foreign exchange rates, slow transaction times, international trade compliance requirements, lack of choice in payment options, regulatory and compliance costs, fraud and weak security practices, and more.

The data was gathered by Payoneer in its inaugural “SMB Ambitions Barometer” report. The leading cross-border payments platform surveyed 3,575 businesses across 15 international markets to find out their thoughts on global expansion, their ambitions and how they plan to achieve them.