Bitcoin, the virtual cryptocurrency has been one of the buzz words of 2017, besides GST and Reliance Jio. The virtual currency has quickly soared in terms of value making many wish they’d invested in bitcoin a few months back. And then, there are those who are still considering investing in Bitcoin. If you are one of them, you should read the latest warning issued by government. Also Read - Bitcoin price jumps after Elon Musk tweets Tesla will accept crypto in futureAlso Read - How to buy Bitcoin in India: Top 5 apps to buy, sell and trade Bitcoin
In a press release, the Ministry of Finance has warned people against investing in virtual currencies. The government has also compared them to Ponzi schemes. There is a real and heightened risk of investment bubble of the type seen in ponzi schemes which can result in sudden and prolonged crash exposing investors, especially retail consumers losing their hard-earned money, the press release reads. Also Read - This country becomes world’s first to approve Bitcoin as official currency
The finance ministry s release follows crackdown by the South Korean government on trading in bitcoins yesterday, after which its value dropped down by eight percent. The government said that virtual currencies such as Bitcoin have seen a phenomenal rise in recent times, in India and globally.
As virtual currencies don t have any intrinsic value, and are not backed by any type of assets, the price is a mere speculation, which ultimately results in spurt and volatility in prices. Consumers need to be alert and extremely cautious as to avoid getting trapped in such Ponzi schemes, the government added.
Virtual currencies are stores in electronic / digital format, which also makes them vulnerable to malware attacks and hacking. Such an incident, can result in permanent loss of money. Also, as virtual currency transactions are encrypted, they can be used to carry out illegal activities such as smuggling, terror funding, drug trafficking and other money-laundering Acts, the government cautions.
The finance ministry also said that traders and investors of virtual currencies have already been cautioned in December 2013, February 2017 and December 2017 by the Reserve Bank of India (RBI) regarding security-related risks. RBI has also clarified that it has not given any licence / authorization to any entity / company to operate such schemes or deal with Bitcoin or any virtual currency, it added. Also, virtual currencies are not legal tender and they do not have any regulatory permission or protection in India.