The recent debacles with some of the crypto currency exchanges have most people on edge. One of the most prominent of all the exchanges “fail” is Mt.Gox. Yes they have claimed “they didn’t know of the problems“ and “they were hacked’. Some people who have lost a lot have filed claims against Mt Gox . Through certain interviews and court related press releases it appears that the CEO, mark Karpeles, knows a lot more than he is admitting. If you are innocent and really didn’t know about theft and hacks, why hide and lie at lawsuit hearings and to the community?
However Mt Gox isn’t the only one. BTC China is trying to ease people’s tensions about rumors flying around that China’s central bank could prohibit money transfers from btc to other currency, Cryptsy is fumbling around in the dark and trying to get extra secretive taxes, and the list goes on and on. It’s no wonder that some people are asking themselves “how to spot shady exchanges”.
Free versus regulated.
Some people are thinking out loud and ask themselves if regulation, particular for exchanges, would be a good thing seeing the recent problems. That way people’s money and transfers are getting controlled and the exchanges will be a lot more secure, or so they think. This regulation is also to deter Jack and Jane Public to not just create an exchange and get rich quick. It is relatively easy to create an exchange and rake in the profits.
Regulation does have its advantages but has also many negative traits. If the regulation is done by a private company, not vetted by the government, people will be very susceptible to huge fluctuations in everything they own on that exchange. SO the only “best” way to create some certainty and stability is to get the government involved in the regulatory process. The government can have good intentions but good intentions can go awry very quickly. If you have a data collecting shadow oversight commission that basically does what it wants, you probably know about what we are talking about, can use the exchange client information against the exchange users.
When BTC and other crypto currencies were created one of its main characters was that it was anonymous. Some proponents that are against regulation are arguing that that aspect should be always held high and never be compromised.
Regardless of the many pros and cons the battle for “regulated” and “not regulated” isn’t over by a long shot. Both sides have flaws so it comes down to choosing a lesser of two evils. How does one “arm” themselves against dubious exchanges and their practices? The trick is to pick up on certain tell-tale signs of “possible bad moon risings” when it comes to exchanges.
How to spot possible shady exchanges.
One of the obvious things one can find out is going through exchanges public statements. If they are fussing about their own rules, like creating “a minimum transaction limit’ while claiming to be a “fair trade” and “the less taxes the better”, warning signs should go off in the back of your head. Some exchanges are genuine and inform about their “tax rates”. We aren’t talking about those exchanges. We are talking about the backdealing things some of these exchanges do because “they are the biggest, baddest kid on the exchange block” and “ are invited to podcasts”, while they are changing their own rules and taxes behind the scenes without informing their clients.
However the exchanges can remove previous statements from their site so they can claim journalists that report on that as “spreading false rumors” because “ the company never issued such statements about “freedom and fair trade” “.
Another way to find out if there is something going on behind the scenes is to search for information on news sites and forums that report on crypto currencies. It isn’t always reliable and some news sites have been known to “take a bribe” to present a certain point of view or downplay a certain event.
If you want to do your information gathering as a pro you also look at the reports that do not have links and footnotes. In everyday newspapers there aren’t those either so do not ignore a potential information source because they “haven’t written down their references”.
So are Crypto exchanges safe? Some of them are like BitcoinBourse. They are very open and have transparency regarding fees. The more established exchanges like cryptsy you should be wary of. Cryptsy has a tendency to change things without reporting on them or just blatantly contradicting their “core values”. There have been unconfirmed reports that Cryptsy has deleted previous statements. Our question is why would they do that , what are they hiding?
So people when looking for a good exchange, always sift through their information, that include looking at reliable and unreliable info, before committing to that exchange. It is basic modus operandi with everything one does but hey we are talking about people’s money so you can’t be careful enough right?