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

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
Janne Lindqvist, assistant professor of electrical and computer engineering. Credits: Patrick Kelley

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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Dog Found Still Being Held at Shelter

January 15, 2018

A dog that was found on Jan. 9 is still being held at the Newark Animal Shelter because no owner has claimed him. 

Roselle Police said the dog was found in the area of the Roselle side of Warinanco Park. The dog has a distinct blue eye and brown eye. Police also said the animal was checked and had no chip or tags. 

The Newark Animal Shelter has ...

SCVTHS Holds First Ever Alumni Homecoming Event

January 19, 2018

BRIDGEWATER – On Jan. 3, SCVTHS held its first ever Alumni Homecoming event. 

More than 60 alumni, including one graduate from 1972, attended the event. Thanks to generous donations from the school’s career and technical programs and their partners, many of the alumni left the event with door prizes. 

SCVTHS Administrator Mario Peluso who chaired the organization ...

Healthy Relationships

The Healthy Relationships intervention (a group for African Americans/Hispanics living with HIV) second cycle,  will begin on Tuesday, 23rd January 2018 at Home First Family Success Center, 1100 Woodruff, Hillside, NJ 07025.

At the initial session each person, who brings an eligible individual to enroll in this cycle will receive a GIFT CARD, and also their guest will receive a GIFT ...


South Plainfield – Joanne Gallo, 68, of Palm Beach Gardens, FL and Warren, NJ, passed away ...
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WHRHS Wrestling: Watchung Hills Warriors Roll Past Governor Livingston Highlanders To Remain Unbeaten in Season

January 20, 2018

BERKELEY HEIGHTS, NJ-  The Watchung Hills High School Warriors came into the action Friday night with an unbeaten record as a team and looked to continue building on their start to the 2017-18 season. The Warriors (ranked No. 13 on’s Top 20) got four pins as they defeated the Highlanders by a final score of 62-13 in Berkeley Heights.

Four wrestlers, three Warriors and ...

Schools Call Delayed Opening in Warren, Watchung Hills District: Watch for Black Ice and Downed Trees

WARREN, NJ - Warren Township, Green Brook, Long Hill, Watchung, and Watchung Hills Regional High School have all made the call to have a delayed opening Wednesday, due to inclement weather and poor road conditions. Conditions will be reassessed at 6:30am. Any changes to the district's operating status will be communicated by 7am.

In Warren, the schedule is as ...

Adele DeLeeuw Scholarship Open to Area Students, Applications Now Available

PLAINFIELD, NJ - Adele DeLeeuw had been a prominent Plainfield resident, and had established a scholarship fund to assist needy students in the Plainfield area for their pursuit of post-secondary education.  High school seniors wishing to apply for the 2018 Adele DeLeeuw Scholarship can now obtain applications from their school guidance office. 

The scholarships range from $1,000 to ...

High School Senior Dies; Counselors at ALJ Providing Support to Classmates

CLARK, NJ – Students at Arthur L. Johnson High School are mourning a classmate who died Monday evening. 

“I am writing to you with great sadness that one of our ALJ seniors passed away this evening. Our deepest sympathies go out to her family and friends,” school Superintendent Ed Grande wrote in a letter to parents Monday night.

The ...

Bound Brook Fire Victim Identified

January 19, 2018

SOMERVILLE, NJ – The Somerset County Prosecutor's Office has identified the body of a woman found inside a multi-family residence gutted by a Jan. 7 fire as 25-year-old Litze Romero.

The positive identification was made by the New Jersey Regional Medical Examiner's Office, according to Somerset County Prosecutor Michael H. Robertson.

The fire occurred at the victim’s ...

Beloved Youth Services Librarian Leaves SCLSNJ

BRIDGEWATER, NJ - After 25 years as a librarian in the Somerset County Library System, at the Bridgewater branch, youth services librarian Carol Simon Levin submitted her retirement papers in January.

News of her leaving the library system caused uproar from parents and library system employees who have benefited from her services over the years, and several turned out to the county ...

Franklin Township Clerk Arrested and Charged with Insurance Fraud (UPDATE)

HILLSBOROUGH, NJ - Franklin Township Clerk Ann Marie McCarthy was arrested and charged last month, for deceiving Horizon Blue Cross for payments of services for which she did not receive, according to court documents. 

Between Jan. 1, 2016 and Sept. 1, 2017, McCarthy made it appear as though she received treatment and services eligible for insurance coverage reimbursement "in an ...

State Unveils $786K Grant to Local Opioid Recovery Center

NEW BRUNSWICK, NJ - Solutions to the state’s opioid crisis have landed in the lap of The Center for Great Expectations, an outpatient drug rehab center which operates in New Brunswick and across Middlesex, Somerset and Hunterdon counties.

The center is being armed with a $786,524 grant to provide treatment services for opioid-dependent pregnant and postpartum women and older adults, NJ ...

Police Officer in Kayak Assists in Rescue of Man from Shark River Inlet

January 16, 2018

AVON-BY-THE-SEA, NJ — Belmar Patrolman Lawrence Kelly played a major role in the rescue of a 59-year-old man this morning, January 16, from the Shark River Inlet, according to police.

Belmar Police and Belmar Water Rescue Team were among local responders answering an emergency call at 8:55 a.m. of a man in the frigid waters near the Main Street bridge, said Belmar Detective Capt. Thomas ...

Dog Found Still Being Held at Shelter

January 15, 2018

A dog that was found on Jan. 9 is still being held at the Newark Animal Shelter because no owner has claimed him. 

Roselle Police said the dog was found in the area of the Roselle side of Warinanco Park. The dog has a distinct blue eye and brown eye. Police also said the animal was checked and had no chip or tags. 

The Newark Animal Shelter has ...

The Role of Meal Replacements in Weight Loss

January 15, 2018

Obesity is at epidemic proportions in the United States and in other developed and developing countries. The prevalence of obesity is increasing not only in adults, but also in children and adolescents. We all know that obesity is a significant risk factor for various chronic illnesses, most importantly heart disease and diabetes, but also cancer and osteoarthritis, liver and kidney disease, ...

Get Off the Couch. Walk the Dog. Live Longer.

“Sitting is the new smoking”. This is the new mantra in cardiology and global population health. Sitting, or a sedentary lifestyle, has long been known as a risk factor for the development of heart disease. Excessive sitting is also associated with a higher mortality rate. Is sitting really as bad as smoking for your health? Why is sitting so detrimental? What strategies can combat a ...