1 financial consumer protection issues: crypto-currencies sixth annual african dialogue conference...
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Financial Consumer Protection Issues: Crypto-currencies
Sixth Annual African Dialogue Conference
Lilongwe, MalawiSeptember 2014
Charles Harwood U.S. Federal Trade Commission
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Crypto-currencies in Africa
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Topics of Discussion
Crypto-currencies What? How? Why? Bitcoin and Competing Currencies Strengths/Weaknesses Regulation Consumer Protection Issues
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What is Crypto-currency?
* Virtual currency* Decentralized* Peer-to-peer
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How Does it Work?
“Mining” for coinsCrypto ExchangesThe digital wallet
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Why Would People Use It?
AnonymityNon-government issued currency
Investment potential
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Bitcoin – The First and Most Famous
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Bitcoin – What’s it worth?
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Strengths and Weaknesses
Microtransactions Low transaction
costs Potential Reduction
in Loss of SI/PII Ease of transactions Unbanked/
Underbanked
Means of money laundering/illegal activity
Volatility No existing consumer
protection Security of stored
coins Liquidity
trap/Hoarding
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Future potential?
Unbanked and underbanked Inner cities Rural
Developing world Cell phones Small transactions
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Exchange rates volatile and costs unclear Rapid value fluctuation Undisclosed costs and fees
Hackers and scammers pose serious security threats Potential targets for highly sophisticated
hackers Fraudsters take advantage of hype around this
new currency May be hard to obtain help or refunds for lost
or stolen funds
Consumer Protection Implications