Real World Problems of Virtual Currencies
Gopal Jiwarajka, President, PHD Chamber of Commerce and Industry says, “Bitcoin is fraught with risks and not backed by any tangible asset. But the number of investors are still growing, which is a concern.”BY Nibedita Mohanta | Dec 20, 2017 | comments ( 0 ) |
One would have noticed the sudden rise in value of crypto currencies, better known as Bitcoin. The recent development in the virtual world is that the sudden surge of five times the value of crypto currencies has unleashed people’s expectation of making their money five times of what it is now.
R Gandhi, Deputy Governor, Reserve Bank of India (RBI) said, “Block chain, the foundation for Bitcoins like innovations, is touted to be the death knell of currency. I believe its potential is being overstated. We can see that in these types of solutions for virtual currency, there is no central bank or monetary authority. They pose potential financial, operational, legal, customer protection and security related risks.”
Gopal Jiwarajka, President, PHD Chamber of Commerce and Industry says, “Bitcoin is fraught with risks and not backed by any tangible asset. But the number of investors are still growing, which is a concern.”
Here are five reasons why businessmen should not invest in crypto currency:
1. Virtual Cannot be Real:
Crypto currency is a virtual currency or virtual money, which will float in the internet world; it cannot come to real form like the other investments.
The aura it has created exists in virtual world and can never be used in real world such as to buy property or paying medical bills or to acquire another venture. Once the money is gone, there is not a direct way to get it back. Even if one tries to exchange or share the crypto currency in the hour of need, it is difficult to find buyers. It is a black hole which swallows whatever comes its way, there is no way out.
2. Lack of Clarity:
Financial experts and experts who have studied the sensex for ages now, are unclear about the crypto currency concept. They say they are unable to analyse and find out as to how and why these currency claim to grow. Moreover it is unpredictable as to when the market is going to shoot up or crash down.
When anything about the market is unclear, businessmen should not let their hard earned money be invested anywhere, which is far from a real currency.
“Payments by such currencies are on a peer-to-peer basis. No established framework for recourse to customer problems, disputes/ charge backs, etc. is feasible,” Gandhi said.
3. Greed Leads to nowhere:
The tempting schemes and returns are baits thrown by fraud companies to earn big bucks as soon as possible and run away with all the money.
Hitesh Malviya, Blockchain consultant and Bitcoin expert said, “Investors haven’t seen such high returns from other investments within such a short span of time. So, many of them are tempted to try it out, hoping to make quick investment returns.”
4. Legal Problems:
Since December 2013, Reserve Bank of India had also cautioned users, holders and traders of virtual currencies, such as Bitcoins, about the potential financial, operational, legal, customer protection and security related risks that they are exposing themselves to.
Rajeev Chandrashekhar, Rajya Sabha Member wrote to Finance Minister Arun Jaitley and RBI governor, Urjit Patel that there are already reports of a surge in domestic Bitcoin trade and moving of black economy to the Dark Internet. The surveillance and policing requirements are challenging and that he suspects the government and RBI are ill-equipped, currently, to deal with this. He also tried drawing their attention to the need to be ahead of the curve on this rather than behind and so the RBI must develop the capabilities on this urgently.”
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