While cryptocurrencies and the digital ledger technology that powers these virtual assets show promise in the facilitation of legitimate financial services such as remittances and payments, there are inherent risks to consider.
Here is a list of general risks involved when using cryptocurrencies, otherwise known as Virtual Currencies (VCs):
1. Prices change quickly
The value of a virtual currency (VC) is heavily driven by supply and demand. In other words, its value increases as more people want to get the VC, and decreases when there are unpleasant incidents or negative news involving VCs. Because of speculations in the VC market, prices are unstable and change quickly over time. Users trading, investing and/or accepting VCs bear the risk of loss. There is no legal protection available for VC users in such cases.
In Coins.ph, there is a confirmation screen before any conversion/purchase is done. Price movements can also be monitored through the app, our widgets feature, and this link: https://coins.ph/buy-cryptocurrency/
2. Potential for unlawful use
VC transactions have a high degree of anonymity. The creators, senders and receivers can easily and effectively transact without knowing each other's real identities. The pseudo-anonymous and online nature of VCs make them attractive to fraudsters, scammers and people intending to do unlawful activities, such as money laundering and terrorist financing. Legitimate VC users may be affected in case law enforcers clamp down on certain VC Exchanges.
We'd like to remind customers to exercise extreme care in completing their cryptocurrency transactions because all transactions are deemed final and irreversible. Be wary of investment opportunities offering quick gains/rewards, ensure that entities you are dealing with are properly registered businesses, etc. For more information on ensuring the safety of your funds, you may browse through our Safety and Security section.
3. Prone to theft or loss
Just like any type of asset that is available online, VCs may be subject to hacking or theft, virus infection, and other cyber threats. Users may inadvertently lose their private keys that are used to secure the VC wallet, or their login credentials may fall in the hands of malicious actors. VC holders must adopt sound security practices and other safety measures to protect their VC accounts.
Coins.ph services operate with industry-standard measures such as SSL connections to AES-225 Encryption. Having said that, account holders have the responsibility to ensure that they are the only ones using their account (no one else has access to it), enable two-factor authentication (2FA) or ensure one-time password (OTPs) cannot be accessed by anyone else, etc. You may refer to this article for more security tips: Keeping your Coins.ph account safe
4. VC transactions are immediate and irreversible
In case of fraudulent, unauthorized or erroneous transactions, VC holders may find it difficult to reverse said transactions. VC holders will be unable to file complaints or seek recourse since there is no central authority or issuer that backs or guarantees VCs.
Customers should exercise extreme caution in completing their cryptocurrency transactions as all transactions are deemed final and irreversible. Ensure that all details (e.g. wallet address, destination tag, amount) are correct before confirming the transaction.
We would also like to remind our customers to be extremely wary of investment opportunities offering quick gains/rewards, ensure that entities you are dealing with are properly registered businesses, etc. For more information on ensuring the safety of your funds, you may browse through our Safety and Security section.
5. VC holdings are not insured
In the Philippines, VCs are not considered as deposits. In case VC Exchanges fold up or stop operating, VC holders cannot claim deposit insurance from the Philippine Deposit Insurance Corporation (PDIC).
Being a registered Virtual Currency Exchange under BSP, Coins.ph follows all regulations required for security of customer funds.
If you want to learn more about virtual currencies, you may find the following resources helpful:
- BSP Advisory on Virtual Currencies (2017)
- BSP Frequently Asked Questions (FAQs) on Virtual Currencies