India's Ministry Of Finance Calls Cryptocurrencies Ponzi Schemes

Cryptocurrencies accept existed for well-nigh a decade now, since Bitcoin hit the scene in 2009. And over the years we have seen a slew of cryptocurrencies launch and fail. But it'southward only recently, that many of them – fuelled largely by Bitcoin's skyrocketing value and the adoption of blockchain engineering science – accept managed to catch the investor's eyes, equally an culling to conventional investments.

And now, India's Ministry of Finance has released a statementcautioning people against the risks of investing in virtual currencies such as Bitcoin. The MoF stressed on the fact that cryptocurrencies lack authorities fiat and compared them with Ponzi schemes.

This statement follows a crackdown by the S Korean government on trading of bitcoins which led to an 8-percent drop in its value within 24 hours. Information technology also comes just a week after the Income Tax department conducted raids on 9 cryptocurrency trade exchanges beyond India.

In an official statement, the ministry said, "There has been a astounding increase in recent times in the price of Virtual 'Currencies' (VCs) including Bitcoin, in Bharat and globally. The VCs don't have any intrinsic value and are non backed by whatsoever 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."

India's Ministry Of Finance Calls Cryptocurrencies Ponzi Schemes

The ministry also added that bitcoins and other cryptocurrencies aren't 'legal tender' and they don't have regime authorization. It besides warned that there is a existent risk of an investment bubble in VCs of the type seen in Ponzi schemes which can result in a sudden and prolonged crash.

Information technology is also worth noting that the Reserve Bank of India (RBI) had already cautioned holders and traders of VCs thrice nigh the potential financial, operational, legal risks involved with investing in Bitcoin. In fact, the RBI also clarified that it had non given whatsoever license/ authorization to whatsoever entity/ company to operate schemes or deal with Bitcoin or any virtual currency.

Interestingly, it is estimated that India now accounts for over 10 per centum of the global Bitcoin trade. The cryptocurrency witnessed a staggering growth in the final 12 months and is currently continuing with over 1,200 percent in value.