Finance Ministry Issues Yet Another Advisory Against Cryptocurrency, Likens It To A Ponzi Scam
The Ministry of Finance today (29 December) sent its fourth notice to people talking of possible risks in investing in virtual currencies such as bitcoin which lack a government fiat and compared them with ponzi schemes.
This follows a crackdown by authorities in South Korea on bitcoin trading that resulted in an eight per cent drop in its value yesterday (28 December).
There has been a phenomenal increase in recent times in the price of Virtual ‘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 a matter of mere speculation resulting in spurt and volatility in their prices. Consumers need to be alert and extremely cautious as to avoid getting trapped in such Ponzi schemes. The Finance Ministry’s notice
The ministry had earlier issued notices thrice, once in 2013 and twice this year. It warned that virtual currency, by virtue of its non-government backing carried a higher risk of investment bubbles similar to ponzi schemes and therefore could result in customers losing their money. It also said that due to it being stored digitally, it was vulnerable to cyber threats such as malware attacks and hacking, thus leading to loss of money.