Govt again issues warning against Bitcoin; Sudden crash may occur

Bitcoin is in news for its sudden high and then steep fall. Bitcoin which is recovering from its fall is being compared to ponzi scheme by the government. The government has once again warned people aginst trading in Bitcoin, as this virtual currency lack government fiat.

Bitcoin's current value is around $14,000 after dropping by 8 percent on Thursday. "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," the ministry said in a statement.

The finance ministry warned that there is a real and heightened risk of investment bubble in VCs 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," it added.