Virtual currencies, also known as cryptocurrencies, have had a tumultuous lifespan. In January 2011, for instance, you could buy a Bitcoin for under a dollar; just six and a half years later, that same Bitcoin would have cost you over $17,000 to purchase. Currently, Bitcoin is fairly stable at just over $3000 each, but in the years since its inception, there have been some massive climbs and drops in value.
There are hundreds of virtual currencies now, valued anywhere from pennies to hundreds of dollars. As the industry has exploded, LendEDU has tracked consumer satisfaction and trust in cryptocurrency through a number of surveys and data-driven studies over the years. One such report, published in 2019, reviewed the number of complaints filed with the Consumer Financial Protection Bureau’s Consumer Complaint Database. While those numbers were fascinating, the statistics from 2018 show a disturbing trend.
Year Over Year, Virtual Currency Complaints Up 45% From 2017, 16,483% from 2016
As Bitcoin and other cryptocurrencies grow in popularity and move more into the mainstream of financial instruments, the number of people who are dissatisfied with them has also increased. In 2016, there were only seven complaints made to the CFPB; in 2017 that number jumped to 817, and in 2018 it jumped again to 1,186. That translates to exponential growth in the number of complaints made about virtual currency each year.
The growth of complaints wasn’t as pronounced in the 2017-2018 period, but part of that is attributed to the volatile nature of virtual currencies. Many consumers may see them as highly risky and even unstable, leading those consumers to steer clear.
As Crypto Becomes More Mainstream, More Companies Receive Related Complaints
Where most people had no idea what virtual currencies were a few years ago, the public knowledge of what they are and how they work continues to increase. There are many websites on the internet where a complete beginner can learn in simple terms what cryptocurrencies are and how you can get started investing in them.
That means financial institutions are also taking notice, and some of them are trying to get in on the trend. Fidelity, one of the largest financial institutions in the world, announced in October 2018 that they will be including cryptocurrency as one of their financial services offerings.
The flip side of this uptick in virtual currency popularity among financial companies is a correlating increase in the number of consumer complaints. While Coinbase, a company dealing exclusively with cryptocurrency, has by far the most complaints, more traditional financial institutions are also seeing complaints as they get into the virtual currency markets. Capital One, Bank of America, JP Morgan, and even Wells Fargo received a number of virtual currency-related complaints in 2018.
A Few Key Issues Make Up the Majority of Virtual Currency Complaints
Regardless of the company involved, the complaints that consumers have about virtual currencies tends to follow a predictable pattern. The single biggest issue among unhappy consumers for both 2017 and 2018 when it comes to cryptocurrencies is that their money wasn’t available when it was promised. Second to that were other transaction issues, which were lumped together as a type of complaint. Trading virtual currencies can often be a volatile pursuit, with values sometimes changing faster than stock. Due to the nature of how virtual currencies work, forgetting an account password can sometimes mean your entire virtual currency portfolio is simply inaccessible forever—and that level of security, meant to cut down on fraud, can lead to complaints.
Service issues were also a problem. While many of the financial institutions new to Bitcoin and other virtual currencies could be expected to have some glitches in their initial product offerings, Coinbase once again took the top spot. Its sheer volume of transactions and users accounts for some of that.
Some consumers complained that virtual currencies did end up feeling more like a scam, with 14 percent of complaints pertaining to fraud or other related things happening as result of their virtual currency dealings.[The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views and/or the official policy of the website. ]