Virtual currencies like Bitcoin run on speculation, Finance Ministry cautions investors

CBI,Bitcoin, Bitcoin, India,RBI, Reserve Bank of India

After Singapore, it is India’s turn to warn consumers about the pitfalls of investing in virtual currencies like Bitcoin.

Today, Finance Ministry has taken note of the surge in the prices of these virtual currencies and said that these virtual currencies don’t have intrinsic value and aren’t backed by any assets.

It also said that the price of Bitcoin and other virtual currencies is matter of speculation resulting in spurt and volatility in prices.

But worst is that the ministry equated the virtual currencies with fraud Ponzi type schemes. ANI News quoted the Finance Ministry as having cautioned the investors by saying that there is a real and heightened risk of investment bubble of the type seen in ponzi schemes that can result in sudden and prolonged crash exposing investors, especially retail consumers losing money.

Therefore it said that the consumers need to be cautious as to avoid getting trapped. Virtual currencies such as the Bitcoin are not much popular in India and the Indian government has time and again issued warnings over its usage. Recently, Bitcoin was used by rogue CBI officials which again brought to light the negative aspect of these virtual currencies.

Bitcoin used by rogue CBI officials for illegal transactions