Model risk

Virtual currency is not real currency, and there is no central bank to control the total amount and macro-control behind it. Whether it is valuable depends entirely on its supply. For example, according to Satoshi Nakamoto's algorithm, the final supply of bitcoin is 2? 1 million, and there will be no more. However, if its model is found to be flawed, resulting in a massive increase in money supply, the current trading platform and investors will be wiped out.

many algorithm enthusiasts have made repeated deduction, and no model defects have been found so far.

Possibility of risk: 1

Degree of risk influence: 5

Market depth risk

At present, the value chain of virtual currency is mainly composed of miners and traders, with less money supply and fewer market participants. Compared with other mature markets, bitcoin transactions are inactive and easily affected by large capital inflows and outflows. In addition, market depth risk will also lead to market manipulation risk and liquidity risk.

(1) Market manipulation risk

Because

it is virtual currency, it can be tapped by setting up a "mining machine". If a large amount of money is invested in exploiting virtual currency before it is booming, and it will be absorbed on dips in the market, when it occupies a certain proportion in the market, such as more than 15%, it may manipulate the whole market. Compared with small-cap stocks in the stock market, it is easier to manipulate a new non-bitcoin virtual currency market. It is extremely difficult for ordinary investors to make money in such a market.

coping strategies: form industry self-discipline, and monitor accounts in the platform. We should warn or even stop the trading of virtual currency in large quantities in the platform, and beware of it relying on large funds to manipulate the market. But considering the internet spirit advocated by virtual currency itself, it is extremely difficult to do this. In addition, at present, all platforms are unofficial institutions, so it is very difficult to share information between platforms, and it is difficult to lock whether the same group is building positions and manipulating the market after passing the

verification and bank account number.

Possibility of risk: 3

Impact degree of risk: 4

(II) Liquidity risk

Virtual currency is often difficult to buy or sell at a reasonable price because of the lack of market depth, after irrational prosperous thinking or sudden panic, especially when large amounts of funds or virtual currency enter the market.

The strategies should be

right: 1. Existing participants in virtual currency can actively recommend this category to the government and the public to increase market participants; 2. To operate Bitcoin in the form of fof, that is, to form a virtual fund that invests in virtual currency < P >, allowing investors to buy in shares instead of having to buy in integer form; 3. The big platform should have a certain amount of virtual currency reserve, and form a powerful market maker to ensure that it can absorb a large amount of virtual currency or funds appearing in the market when it encounters a sudden impact of large funds. 4. Do a good job in educating investors. When there are more mature participants in the market, the market will become more stable.

Possibility of risk: 4

Influence degree of risk: 4

Platform risk

At present, many virtual currency platforms basically need to deposit funds into the platform for buying or selling. In order to attract investors, some platforms often offer preferential conditions for free handling fees. However, some free platforms are risky. For example, in October 213, a bitcoin trading platform registered in Hong Kong suddenly ran away on the grounds of "being hacked" and all the executives disappeared. Later, it was estimated that this incident swept away about RMB 3? million yuan.

We should

make strategies: 1. After determining whether to invest in virtual currency and what kind of virtual currency to invest in, investors should inspect and identify the platforms, and choose a platform with strength and good reputation for trading without being influenced by petty profits. 2. Investors should pay attention to all kinds of news of the platform they invest in and do a good job in observing the changes in their reputation; 3. Regulators should bring the trading platform of virtual currency into the scope of supervision, and require it to

pay reserves and deposits to prevent such moral hazard.

Possibility of risk: 1

Degree of risk influence: 4

Circulation risk

One of the fundamental functions of currency is that it can be continuously used as a means of purchase in the process of commodity circulation to realize the price of commodities. So far, only a few merchants accept virtual currency as a means of payment for circulation. Or

, a considerable part of the participants who invest in virtual currency at present are for the purpose of gaining the price difference, and only a small part are for the purpose of storing it in advance with the future currency.

Coping strategy: Existing participants in virtual currency should actively recommend this category to the government and the public, and increase the number of businesses in the market willing to accept virtual currency as a means of payment.

Risk Possibility: 4

Risk Impact Degree: 3

Legal Subject Risk

On December 5, 213, the People's Bank of China, together with the Ministry of Industry and Information Technology, the China Banking Regulatory Commission, the China Securities Regulatory Commission and the China Insurance Regulatory Commission, issued the Notice on Preventing Bitcoin Risks, which claimed that bitcoin should be a specific virtual commodity in nature. Circular No.21 of 214 issued by the US Internal Revenue Service stated that Bitcoin and other virtual currencies will be regarded as property instead of < P > being a currency. In a word, there is still a long way to go to establish the legal subject status of virtual currency.

coping strategies: the existing participants of virtual currency should actively exert influence on the government and regulatory authorities to establish the legal subject status of virtual currency as soon as possible.

risk possibility: 5

risk impact degree: 3.