Bitcoin, Ethereum, and Other Blockchain Based Cryptocurrencies: a Proactive Risk Management Perspective

Bitcoin, Ethereum, and Other Blockchain Based Cryptocurrencies: a Proactive Risk Management Perspective
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This column has previously covered a variety elements of cryptocurrencies such as Bitcoin and Ethereum, such as anonymity, usage (legal and otherwise based upon anonymity), pricing, and a “fork” in Bitcoin technology.

As with nearly all articles in this series, those pieces have kept an “eye” on the inherent risks in this effectively invisible private currency system.

Recently, the longitudinal staying power of cryptocurrencies has again “made the news.” Simply put, will blockchain-based currencies such as Bitcoin and its peers survive? And if yes, for how long? And further if yes, under what regulatory and market conditions?

Prince Alwaleed bin Talal, a Saudi billionaire investor, has suggested Bitcoin will someday “implode”, likening risk profile of Bitcoin, due to its unregulated nature, to the prior Enron collapse. That position is not, however universally accepted as a cause of consternation, but rather a reminder to stay vigilant to short-term pricing volatility. As to recent value changes, and the prospect a Bitcoin bursting “bubble”, watch this video from the Wall Street Journal.

For a Florida perspective on Bitcoin regulation, note the cautionary approach of Thomas Peterffy, who founded and chairs Interactive Brokers LLC, a futures commission merchant and broker-dealer, in an open letter to the Chairman of the Commodity Futures Trading Commission.

Given blockchain-based currencies’ relative youth as a financial medium, users and investors should carefully consider their overall goals – usage (legal only, of course), investment, or speculation – and thoroughly educate themselves about its potentials and limitations, before wading into the waters of this still emerging innovation.

Simply put, will blockchain-based currencies such Bitcoin and its peers survive? And if yes, for how long?

As noted in a prior piece in this series, a useful source for staying attuned to the digital currency industry is the Chamber of Digital Commerce. (Full disclosure: The founder and President of the Chamber is a former student of the author of this article.)

To consult with an experienced business law lawyer today, call 855-686-6752

– For more information, call Philip N. Kabler of the Gainesville, FL office of Bogin, Munns & Munns at 352.332.7688, where he practices in the areas of business, banking, real estate, and equine law. He has taught business and real estate law courses at the University of Florida Levin College of Law and Warrington College of Business Administration. And is now the President-Elect of the Eighth Judicial Circuit Bar Association.

NOTICE: The article above is not intended to serve as legal advice, and you should not rely on it as such. It is offered only as general information. You should consult with a duly licensed attorney regarding your Florida legal matter, as every situation is unique. Please know that merely reading this article, subscribing to this blog, or otherwise contacting Bogin, Munns & Munns does not establish an attorney-client relationship with our firm. Should you seek legal representation from Bogin, Munns & Munns, any such representation must first be agreed to by the firm and confirmed in a written agreement.

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