The New Year has begun with a warning from the Indian Government on investing in Bitcoin cryptocurrency. Today in Rajya Sabha, when DMK member Kanimozhi questioned about the government’s stand on the regulations of cryptocurrencies, Finance Minister Arun Jaitley clarified that bitcoin is not a legal tender in India and government is waiting for a report of expert on crytocurrencies before taking any decision.
It is to be noted that RBI keeps issuing similar warning from time to time. They have been warning the Indian investors to avoid trading with virtual currencies.
Finance Minister Arun Jaitley said, “The government is examining the matter. A committee under the chairmanship of secretary, department of economic affairs, is deliberating over all issues related to cryptocurrencies to propose specific actions to be taken. Repeated message was being given that such currencies are not legal tender, more detailed steps would be taken once the report of the committee is submitted.”.
“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,” the Finance Ministry said in a statement.
Major risks involved in cryptocurrencies are as below:
- Lack of regulatory supervision – In case a ban is imposed by government on cryptocurrencies, all your hard-earned money invested in virtual currencies
would become inaccessible.
- Lack of knowledge – Majority of people are not aware of cryptocurrencies and its blockchain technology. The primary reason for going in for cryptocurrency is for making Most quick money. This speculative investment and greed may make investors to loose all their money.
- Fear of hacking – Digital currencies are always prone to hacking. Hackers can hack to gain access to investor’s money. It is also not possible to track the culprits in case the money is hacked.
- Risk of loosing account – Investor’s whole identity will be saved in a cryptogprahic signature/key. In case an investor looses access to their account, they will loose access to the machine where they have stored it. Unlike banks, there is no authority who can get these keys back.