From an international perspective, investing in virtual currencies faces many complex risks.
Market risk is paramount, as the virtual currency market is extremely lacking in regulation, with price fluctuations akin to roller coasters. For example, Bitcoin once surged to nearly $69,000 in 2021, only to plummet more than 70% the following year, resulting in significant losses for many investors. Technical risks cannot be ignored; although blockchain technology is innovative, issues such as smart contract vulnerabilities and hacking attacks are frequent. The Mt. Gox exchange lost 850,000 Bitcoins due to a hacking attack, directly leading to the platform's collapse and leaving countless users with nothing.
Regulatory policy risk is also fraught with uncertainty. Countries have differing attitudes towards virtual currencies, with some strictly limiting or even banning them, such as India, which has repeatedly proposed banning cryptocurrencies; while other countries maintain an open stance, policies may be adjusted at any time due to financial stability needs. Fraud risk is equally rampant, with false ICOs (Initial Coin Offerings) and Ponzi schemes emerging under the guise of virtual currencies, where some project teams lure investors with high returns, ultimately absconding with the funds. Meanwhile, the anonymity of virtual currency transactions is often used for illegal activities such as money laundering and terrorist financing, which also exposes investors to potential legal entanglement risks.
