Government cautions people against risks in investing in virtual currencies, calls it Ponzi schemes

The government on Friday cautioned people against risks in investing in virtual currencies which are like ponzi schemes. “There has been a phenomenal increase in recent times in the price ofVirtual Currencies (VCs) including Bitcoin, in India and globally. The VCs don’t have any intrinsic value and are not backed by any kind of assets. The price of Bitcoin and other VCs therefore is entirely amatter of mere speculation resulting in spurt and volatility in their prices, “ the finance ministry said in a statement issued early morning.

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. Consumers need to be alert and extremely cautious as to avoid getting trapped in such Ponzi schemes. VCs are stored in digital/electronic format, making them vulnerable to hacking, loss of password, malware attack etc. which may also result in permanent loss of money.