Italy: Cryptocurrency Poses 4 Types of Risk for Community

Jun 04, 2019 at 11:02 // News
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Judicial authorities registered increased complaints related to the illicit use of digital currencies.

Cryptocurrency poses four major types of risk, namely, financial, monetary, criminal and law enforcement, according to a report by the Guardia di Finanza (Gdf). The techniques are somehow sophisticated, restrained and variable. Judicial authorities registered increased complaints related to the illicit use of digital currencies.

The financial information unit (UIF) of the Bank of Italy indicated that the technology is not neutral although it carries some benefits and that under some conditions and guarantees, cryptocurrencies and blockchain has become a major opportunity for many Italian investors.   

In these four types of risks, each carries its own implications: the contrast to illegal digital currencies, for instance, comes to grips with "anonymity, localization, registration and reconstruction" of indefinable or almost remote processes.   

Speculative Bubbles are also Possible

While the illicit risk has declined in the use of cryptocurrency to finance and support fraud, drugs, black market, recycling, and terrorism. Hypothetical bubbles are also possible. And of course, Italy surely can't fight alone: ​​Risk assessment must be of an international nature, highlights the analysis of Finance. Citizens are advised to be acquainted with the pitfalls, and the opportunities, of the cryptocurrencies, all Italian citizens have the role to play to intricate a diagnostic in a prognostic key for the protection of the system at the strategic level.

Cryptocurrencies could be a system for accessing finance for those who would have no other possible way. But there are two alternative ways: a self-created cryptocurrency and transactions entrusted to a server. With the risk of deceitful server administrators, users who ill-use authentication errors, cyber-attacks that empty the server. Quite the reverse, relying on a blockchain guarantee, the digital identity of the author and the no-no of changing the contents.

Judiciary is Concerned About Cryptocurrency

Users are presently familiar with a centralized system while digital currency is decentralized: it exists in a network so governments and banks (central authorities) have no control over it. They are then calculated with obscurity since the crypto consists of a set of characters and is not connected to any personal data of the owner. Therefore, there is a latent use for illegal purposes and digital currencies, compared to fiat currencies, are less liable to confiscations and seizures by the police.

A system which "lends itself poorly to regulation" broadens the outlook: IT crimes grow out of all proportion, the complaints presented to the Postal Police last year soared by 318 percent compared to the one of 2017. Security and data protection do not always exist together: companies in Italy invest less in digital security (around 1.5% of turnover) and regularly buy cheap but, for this matter, risky systems.

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