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Crowdfunding Advantages And Disadvantages Essay

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2.5 Disadvantages and risks associated with Crowdfunding and Bitcoins:

2.4.1 Disadvantages and risks associated with Crowdfunding: Hemer (2011) argues that the consolidation of Crowdfunding industry will take place over many years, during which there will be either failures or cases of fraud such the use of funds for different purposes than what was initially disclosed, portraying someone else’s idea or using the campaign to go on a Phishing trip to gain access to a backer’s personal financial records and use it to defraud the sponsor (Sessoms, S. and CAMS-FCI, 2017). The European Commission (2017) warns Crowdfunding users from its operational risks. For instance, in case of equity Crowdfunding, administrative costs may increase along with …show more content…

The author also highlighted another issue related to the digital currency which is its high volatility due to its high sensitivity to news. Even though Glantz (2014) claims that Bitcoin has a significant lead in terms of brand recognition and venture capital money, as the currency accounts for 77% of the market value of all digital currencies and an even higher percentage of digital currency users, the author warned that these acquired advantages are not safe from technological break-through in the form of a more sophisticated digital currency. In fact, Bitcoin is not taxed and is subject of a competition to a potential government issued currency like the Monetas project in Tunisia (TechMoran, 2015) which is subject of inflation and monetary policies issues and is not an international currency like the Bitcoin. Furthermore, the Federal Bureau of investigation (2012) has reported many cases show the use of Bitcoin for speculative trading, money laundering, drugs and other illegal items commerce which is due to the absence of a legal framework. In addition to that, theft can occur if someone is able to hack into the digital wallet where Bitcoins are stored and there are limited options to recover lost or stolen Bitcoins (Federal Bureau of Investigation,

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