In the realm of money, no bigger news topic has surfaced over the last several years than virtual currency. The rise in popularity among everyday consumers and those with advanced knowledge of digital currency has been hard to ignore, giving rise to more companies entering the market. Businesses understand the vast potential virtual currency and the framework on which it operates holds, and each wants its piece of the consumer pie. However, being successful in the digital currency world requires equal doses of patience and thick corporate skin, as consumer complaints are abound in the space.
From 2016, Virtual Currency Complaints Are Up 16,843%
One of the most notable virtual currencies, Bitcoin, has experienced an exponential climb and fall over the last few years. Its price has moved from just under $800 to more than $17,000, creating a kind of volatility not seen with many other investments over such a short timeframe.
That volatility has increased the level of interest from virtual currency novices and experts alike, and the market for digital money has exploded in growth because of it. As more consumers get involved, it is not surprising government regulatory agencies and oversight organizations have taken notice.
The Consumer Financial Protection Bureau (CFPB) started compiling complaint data related to virtual currency and the growing number of companies providing services in the market to consumers. LendEDU went ahead and analyzed said data from the CFPB.
Between 2016 and 2017, virtual currency related complaints rose by 11,571%. Between 2017 and 2018, the growth in complaints was less dramatic but still a notable increase of 45%. The initial boom in consumer complaints between 2016 and 2017 is most likely attributed to the rapid increase in the price of Bitcoin.
Not Surprisingly Due to Its Market Share, Coinbase Most Complained About Company
Although the virtual currency marketplace has experienced significant growth, it hasn’t all been positive news for the companies that serve consumers. One of the largest digital currency platforms by market share, Coinbase, has felt the brunt of increasing complaints from virtual currency consumers.
In 2017, Coinbase received 73% of all complaints reported to the CFPB, with a similar 78% of complaints in 2018. The second largest percentage of complaints was received by PayPal in both years, at 12% and 8% respectively.
While some may be concerned over the volume of complaints against Coinbase in the virtual currency market, the large percentage the company received has more to do with its vast reach among consumers. The company has led the way in cryptocurrency for several years, and it is by far the most well-known exchange, wallet, and platform for consumers.
Because of its presence and strong reputation in the world of virtual currency, it isn’t shocking that it would receive the most complaints. The majority of consumers involved in digital currency transactions use the platform, so receiving the majority of complaints is expected. However, most complaints are tied to the virtual currencies themselves, not the company or its services.
What Can We Expect From Virtual Currency in 2019?
Throughout 2018, the allure in the virtual currency market waned due to widely covered news surrounding Bitcoin’s price crash. However, the next year or so in digital currency has some anticipated shifts that are worth pointing out. First, many believe that because a stabilization in the price of virtual currencies is taking place more institutional investors are likely to get involved. Institutional investors, with deep pockets and more advanced infrastructure, have the potential to change the game for companies and consumers alike over the next several years.
This shift, though, may also come with a heavier dose of regulation from the powers that be, based on the influx of institutional-level money coming into the marketplace.
In addition to institutional investors, virtual currency is also expected to shrink in terms of legitimate offerings. During the Bitcoin price crash, many consumers investing in other virtual currencies were surprised to find their “flavor” of digital currency wasn’t exactly as advertised. Consumers didn’t get the value they anticipated, and some were scammed out of their investments altogether.
Out of the 2,000 virtual currencies available, only 1,000 remained viable after the crash. The prediction here is that the market of available virtual currencies will continue to naturally weed out the bad actors, leaving only those options and platforms that provide true value to consumers.
The changes in virtual currency have been equally exciting and difficult to follow over the last few years, and that isn’t expected to go away anytime soon. The number of consumer complaints is likely to continue moving up, but at a much slower pace than years past as new platforms become available and more consumers regain confidence in the market.
Over time, the companies in virtual currency that offer the most value to consumers will thrive, while those that can’t deliver on what’s promised will cease to exist.