The UK outpost of Wired magazine today cited research by SMU computer science professor Tyler Moore, which found that 45 percent of online exchanges that change hard currency into the online currency Bitcoins end up closing.
More than that, if an exchange somehow gets large enough to justify staying in business, it soon becomes a prime target for cyberattacks.
The study said: “Exchanges handling 275 Bitcoins’ worth of transactions each day have a 20 percent chance of being breached, compared to a 70 percent chance for exchanges processing daily transactions worth 5570 Bitcoins.” Moore and Christin estimate that the median lifespan of any Bitcoin exchange is 381 days, with a 29.9 percent chance that a new exchange will close within a year of opening.
An extra risk for customers is losing their money from exchanges closing. Of the 18 closed exchanges, there was evidence that only six reimbursed their customers. Five did not, while there was not evidence enough to make a judgement regarding the remaining seven.
Anyway, yeah, maybe don’t trade in all your greenbacks for Bitcoins.
