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Bitcoin Risks: What You Should Know About the Volatile Digital Currency

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Bitcoin, a popular digital currency introduced in 2009, features a peer-to-peer network with a public online ledger for tracking transactions. Credits: FabreGov/Shutterstock
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Janne Lindqvist, assistant professor of electrical and computer engineering. Credits: Patrick Kelley
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NEW BRUNSWICK, NJ - If you own Bitcoin or want to invest in the mercurial digital currency, which soared to more than $19,000 before plunging in value, watch out, a Rutgers University–New Brunswick professor says.

Security and privacy issues, not to mention the possibility of a Bitcoin market crash, should give you pause for concern, according to Janne Lindqvist, an assistant professor in the Department of Electrical and Computer Engineering in the School of Engineering.

Bitcoin, a digital currency introduced in 2009, features a peer-to-peer network with a public online ledger for tracking transactions. Bitcoin prices have soared in recent months, and people can buy and sell Bitcoins with some anonymity.

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Rutgers Today sought Lindqvist’s views on a variety of Bitcoin issues. In 2016, he co-authored the first peer-reviewed study on user and non-user attitudes about Bitcoin.

Rutgers Today: Does the general public understand how Bitcoin works?

Based on our study, people don’t seem to understand how it works, and that’s a big problem if you want to invest in it. You can sign up for Bitcoin with a credit card without really understanding it. However, it is not like people generally understand how credit cards work either, so owning and doing transactions is not an issue in itself. The Bitcoin public ledger, known as a blockchain, records all transactions. When someone wants to transfer Bitcoins, they send a message signaling a transaction to the Bitcoin network. The transaction involves the amount of Bitcoins to send, the public address of someone who will receive Bitcoins and a private key used to sign and verify the transaction. The address is a public key owned by the recipient, so users keep the keys to redeem Bitcoins at those addresses in what’s called a wallet. The computers that assemble the transactions in so-called blocks are called miners. They receive Bitcoin rewards as an incentive to verify and post transactions.

Rutgers Today: Why is Bitcoin so hot right now?

I’m sure that some of it is the feeling of not being left out – being too late for the train. A classic example of this phenomenon is tulip mania during the Dutch golden age, when speculators bought tulip bulbs and expected that prices would just rise and rise. Well, they eventually crashed and there was no value to them. We can’t say whether Bitcoin will crash, but Bitcoin mania resembles tulip mania in many respects. It is very human.

Rutgers Today: How would you describe Bitcoin security, privacy and ease of use?

You can buy Bitcoins or parts of Bitcoins with a credit card and create a Bitcoin wallet online. But, somewhat surprisingly, Bitcoin has gained a huge amount of value even though you can’t use it for a lot of important transactions, such as holiday shopping. While Bitcoin transactions can be secure, depending on how you store your Bitcoin wallet online and the mechanisms for protecting your wallet, Bitcoins are stolen from time to time and that’s certainly a risk for users. If you put money in the bank, you get FDIC deposit insurance, but with a digital currency like Bitcoin, you don’t have that kind of security. People typically are not liable for fraudulent credit card charges they are not responsible for. But if your Bitcoin wallet is stolen via hacking, you’ve lost your investment.

Rutgers Today: What can be done to protect Bitcoin users and keep them from getting burned?

Today, what you would need to do is to establish a so-called “cold” wallet that involves, for example, printing records of your possession. Regulators are not quite sure what to do about Bitcoin, and it’s unclear how major banks and retailers will address it. In our study, we found that many Bitcoin users don’t want government regulation, but they want FDIC-like insurance. How long will Bitcoin be increasing in value? Nobody knows. Unlike farmland and other tangible things, Bitcoin does not have intrinsic value. So when it crashes, it crashes, and then you just hope you can exchange it somewhere for money. I would be surprised if Bitcoin’s value doesn’t plunge again at some point, like the stock market does now and then. On the other hand, it can then go back up again. Finally, I do believe Bitcoin and cryptocurrencies (digital currencies) will have an important role in our monetary system and our society, but it is anybody’s guess what that role ultimately will be.

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Somerset Regional Animal Shelter Offering July Adoption Promotion for Cats/Kittens

July 10, 2018

BRIDGEWATER, NJ - The Somerset Regional Animal Shelter, in Bridgewater, is urgently looking for homes for its cats and kittens.

According to a release from the shelter, the population surges throughout the summer during kitten breeding season, and so the shelter is launching a special promotion to help increase cat and kitten adoptions. During the month of July, all cats and kittens that over ...

Do You Recognize These Dogs?

PLAINFIELD, NJ - Two dogs were found in Plainfield near the fire station on Central Avenue on Saturday. 

The dogs are currently with a family in South Plainfield.  If you recognize the dogs, please email TAPinto Plainfield at jpopper@tapinto.net.

A Hidden Gem in the Suburbs – Spring Academy Montessori Pre-School helps children reach their full potential by fostering an innate love of learning!

July 16, 2018

Located on a quiet residential street in Warren, NJ, Spring Academy Montessori Preschool opened its doors to the public in late November 2016.  Spring Academy wanted to fill a niche that was missing in the community -- a pre-school with a Montessori philosophy combined with an emphasis on language immersion.  Since then, parents have been coming from all over to enroll their children in ...

Upcoming Events

Wed, July 18, 7:30 PM

Chatham United Methodist Church, Chatham

Masterwork’s Summer Sing Four to Feature Brahms

Arts & Entertainment

Wed, July 25, 7:30 PM

Chatham United Methodist Church, Chatham

Masterwork’s Summer Sings Conclude with Verdi ...

Arts & Entertainment

Obituaries

Jul 28, 1955 - Feb 8, 2018
Owner/Chef of Jaret’s Stuffed Cupcakes  Beloved Husband, Father, Brother and ...
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Get Ready Warren: Fireworks, Food and Family Fun At Mt. Carmel Feast

July 13, 2018

BERKELEY HEIGHTS, N.J. – It’s time again for the annual Mt. Carmel Feast, a four-day festival full of food, music, games, rides, fireworks, and other family fun, located at Mt. Carmel Field in Berkeley Heights.

The fairgrounds will be open from 6 p.m. to 11 p.m. on Friday, July 13 through Monday, July 16. Those four nights will include concerts, games, and ...

Somerset Regional Animal Shelter Offering July Adoption Promotion for Cats/Kittens

BRIDGEWATER, NJ - The Somerset Regional Animal Shelter, in Bridgewater, is urgently looking for homes for its cats and kittens.

According to a release from the shelter, the population surges throughout the summer during kitten breeding season, and so the shelter is launching a special promotion to help increase cat and kitten adoptions. During the month of July, all cats and kittens that over ...

A Guide to July 4: Fourth of July Fun Facts, a Video and Where to Find Independence Day Celebrations, Fireworks Displays

WARREN, NJ -  Independence Day 2018. “We hold these truths to be self-evident: that all men are created equal; that they are endowed by their Creator with certain unalienable rights; that among these are life, liberty, and the pursuit of happiness.”

Thomas Jefferson penned words based on what he learned as a student of the enlightenment.  John Locke’s writings were ...

To Our Current and Future Representatives

July 17, 2018

To Our Current and Future Representatives - Wherever They May Be:

We can never forget we are a nation of immigrants. 

We cannot fall prey to fear, ignorance and anger when we  have been historically driven by freedom and justice. 

We must have the courage and will to fight hate, bigotry and prejudice. 

We must not wake up to what we hoped was a bad dream and ...

Viewing and Funeral Mass Set for 1-Year-Old Boy Killed in July 7 Crash, Fundraiser Established

July 16, 2018

RARITAN, NJ - A viewing for the 1-year-old Raritan boy killed on Anderson Street July 7 will be held this week at St. Ann Church in Raritan, according to an obituary released by the Bongiovi Funeral Home.

Matias Ortega-Rosales was killed on the evening of his first birthday when a vehicle hit two cars and then his family as he was being pushed in a stroller by his mother, Domitila Rosales.

Bedminster Woman Dies From Injuries After Being Struck by Car in Mall Parking Lot

BRIDGEWATER, NJ - A Bedminster woman has died from her injuries after being struck by a car in the parking lot of the Bridgewater Commons Mall Monday.

Marion Kelley, 62, was struck by a vehicle while walking in lot four near the Macy's merchandise pick up area at around 3:20 p.m. Monday.

The 2017 Mazda was driven by Chinmayi Parikh, 33, of Piscataway.

The crash is still being ...

County Kicks Off Summer Concert Series with Bob Miranda and the Happenings

BRIDGEWATER, NJ - The Somerset County Park Commission kicked off its Summer Concert Series at Duke Island Park Sunday with a performance by Bob Miranda and the Happenings.

A very large crowd turned out for the performance by the band made famous in part by the song "See You in September."

The next concert will be held July 15 at 7 p.m. at Duke Island Park, with Billy ...

Somerset County Flags at Half-Staff to Honor Grace Gurisic, First Woman Freeholder

SOMERVILLE, NJ – Somerset County will fly its flags at half-staff July 12 in memory of Grace A. Gurisic, who served as the county’s first woman freeholder more than half a century ago.

Gurisic passed away June 9; she was 84. Funeral services will be held 8:30 a.m. Thursday, July 12, from the Vander May Wayne Colonial Funeral Home in Wayne. A funeral mass will follow at St.

3-Day ‘AddamsFest’ set to Celebrate Charles Addams and His Creations This Fall

July 14, 2018

WESTFIELD, NJ — It’s creepy. It’s kooky. And it’s taking over Westfield from Oct 26 to 28. AddamsFest, a town-wide celebration honoring Westfield native Charles Addams and his most famous creations, The Addams Family, will be a destination event this fall with family-friendly activities, lectures, exhibits and film screenings, the town announced Thursday.

Watch the ...

Exchange Place and WTC PATH Stations to Close For Weekend Track Maintenance

JERSEY CITY, NJ - At least they waited until after the Fourth of July fireworks were over before starting.  

PATH stations at Exchange Place and the World Trade Center (WTC) will close at 11:59 p.m. this Friday, July 6, and remain closed until 5 a.m. Monday, July 9, to allow crews to transition to a new signal system being installed as part of the ...

Make the Call, Save a Life

July 10, 2018

EAST BRUNSWICK, NJ - There is much focus on preventative opioid abuse education. Rightfully so. However, the goal in addressing the opioid epidemic is saving lives. Even if that means just saving one life. While people are becoming increasingly aware of resources relating to rehabilitative services, support groups for friends and family of addicts, and training parents for signs of opioid and ...

'Servant of Two Masters' exudes foolish fun

‘Servant of Two Masters’ makes for foolish, frivolous fun

By Liz Keill

MADISON, NJ –Carlo Goldoni’s “The Servant of Two Masters,” in a rousing translation and adaptation by Bonnie J. Monte, has the outdoor audience at The Shakespeare Theatre of New Jersey laughing and clapping all the way through.

The yearly production, held at the amphitheatre on the ...