India Cautions Users On Risks Associated With Virtual Currencies

hypnosec writes "The Reserve Bank of India (RBI) has cautioned users of virtual currencies like Bitcoin, Litecoin, and Dogecoin on the risks associated with them and said that it is looking at the use and trading of these currencies. They noted that there are quite a few risks including: theft of digital wallets that are used to store the digital currency, absence of any frameworks to tackle customer problems, disputes and charge backs; exposure to potential losses because of high volatility in value of the virtual currencies, legal and financial risks, and breach of anti-money laundering laws because of lack of complete information on counterparts in a peer-to-peer anonymous / pseudonymous systems."

Comments

Explain something for me.

[Anonymous Coward]

How do we go from the Execuitive Management of a board issuing a press release to "India issues warning"?

Seriously. is India a person? Is the Reserve Bank of India a Person?

No.

Please refer to the PEOPLE making the claims. FFS, organizations are not people.

Dogecoin

[Scoth]

I love that Dogecoin is apparently a big enough thing now to be mentioned in the same breath as Bitcoin and Litecoin.

Re:Dogecoin

[mysidia]

I love that Dogecoin is apparently a big enough thing now to be mentioned in the same breath as Bitcoin and Litecoin.

Bitcoin is the only one that really matters.

The others are posers/copycats, trying to piggyback on whatever fame Bitcoin gets; since significant amounts of Bitcoin can't easily be mined anymore.

The only real advantage of Litecoin/Dogecoin is the group of proprietors who started them and started mining them early have a lot to gain, if Bitcoin's success can blow any extra wind in their sails.

Meh banksters

[silviuc]

Don't use those nasty digital currencies because we have no control over them and make no money on your transactions.

Also because: terrorism, child porn. criminals, insert_scare_word here...

Re:Meh banksters

[Sarten-X]

Bitcoin is regulated. There are laws in place for all valuable assets, regardless of whether they're tangible or not. Of course, many folks who "invest" in Bitcoin don't actually understand those laws or even realize that they should try to. They often don't realize that large transfers (regardless of currency) require documentation, they don't know that capital gains often must be reported for taxes, and they often don't bother keeping the documentation that they'll need when the various government authorities start asking questions. The even-more-naive don't even realize that theft or abuse is just as possible with Bitcoin as with cash.

The point of this statement is to remind people that digital currencies are still currencies. You don't get to escape the rules and risks of reality by using quatloos instead of dollars.

Re:Meh banksters

[pla]

Of course, many folks who "invest" in Bitcoin don't actually understand those laws or even realize that they should try to.

...Primarily because most of the world's governments haven't yet issued guidance as to whether to consider Bitcoin a commodity or a currency for purposes of calculating your taxes.

they don't know that capital gains often must be reported for taxes

You raise an excellent example of why this matters - If someone makes $50k per year (comfortably under $72500) and sells off a few grand in BTC that they've held for over a year, do they pay 15% on it as normal income, or 0% as long term capital gains, or something else entirely?

Don't just assume people haven't paid attention to this issue. We have, and can see all too clearly that the government has held its hand this long solely in an effort to play both sides of the fence.

Re:Meh banksters

[Joce640k]

Don't use those nasty digital currencies because we have no control over them and make no money on your transactions.

Just like cash, then.

Which has been around forever.

In other news, the Dutch warn about tulip mania

[DiamondGeezer]

Bitcoin et al are far too volatile to be used as a reserve of wealth, and have no intrinsic value.

Re:In other news, the Dutch warn about tulip mania

[wbr1]

Dollars, pounds, euros et al have no intrinsic value. And are also volatile (even if not as much as crap to currencies currently are).

Re:In other news, the Dutch warn about tulip mania

[Connie_Lingus]

yes, they do...i'm getting tired of this incorrect meme.

the dollar is backed by "the full faith and credit of the united states government"...yes that means the ability to seize bank accounts and the use of the threat of prison and even guns/bodily harm to get their money to pay its debts.

it's ludicrous to think bicoin has the same feature.

Re:In other news, the Dutch warn about tulip mania

[lgw]

No, that's simply not what a currency is. Never think of a currency as a store of value, but as an aid that makes barter easier. It's a way to measure value, sure, but that's different.

If you want something with intrinsic value, you need to turn your currency into wealth, by which I mean ownership of the means of production. Land, stocks, private businesses, whatever: the only assets with intrinsic value are those which produce something that people want or need. Everything else is mere convention or convenience.

Re:In other news, the Dutch warn about tulip mania

[ultranova]

Bitcoin et al are far too volatile to be used as a reserve of wealth, and have no intrinsic value.

Value is not a quality of an object but rather a subjective judgement of an agent evaluating said object, thus the concept of "intrinsic value" makes no sense. Which is a good thing, because otherwise trading wouldn't exist since at least one party would always be worse off afterwards, thus we'd be stuck raiding each other for ever.

Perhaps the reason is that:

[arisvega]

There spawned a couple of new exchange sites in India over the past few weeks. A few that I checked look legit, demanding some sort of official government documents for user identification, making it non-trivial for scammers to jump aboard the train. It is only natural that there is a warning, and those sites already had more or less the same warning on their frontpages. The fact that this warning is on a state level is a good think for bitcoin (and for potential traders) I think.

cash...

[lkcl]

I note that there are quite a few risks associated with CASH including:

* theft of physical wallets that are used to store CASH
* absence of realistic application of frameworks to tackle customer problems, disputes and charge backs with CASH.
* exposure to potential losses because of high volatility in value of the CASH currencies
* legal and financial risks assocated with trusting strangers with your CASH,
* and breach of anti-money laundering laws where people can carry CASH because of lack of complete information on tracking of CASH between anonymous random strangers.

so. wonderful. india's announcing something random about bitcoin. great! let's watch the value go up again just like it did in china as it comes to more peoples' attention. yay!

Re:cash...

[DiamondGeezer]

And here are the answers for the hard-of-thinking

* theft of physical wallets - the criminal justice system, the police and the courts. Compare that to Bitcoin - someone steals your wallet and you're FUCKED with no recourse to any recompense.
* absence of realistic application of frameworks to tackle customer problems, disputes and charge backs with CASH - look up insurance, regulatory authorities and banking charters. What is there for Bitcoin? You're on your own.
* exposure to potential losses because of high volatility in value of the CASH currencies - which can be easily hedged using real gold and precious metals, oil and other commodities. Bitcoin? Nothing. Your only hope is that there is a bigger idiot waiting to take them on for real currency
* legal and financial risks associated with trusting strangers with your CASH - direct recourse to the legal systems of many countries. Bitcoin? They'll laugh when you complain.
* and breach of anti-money laundering laws where people can carry CASH because of lack of complete information on tracking of CASH between anonymous random strangers - which is why there are anti-money laundering laws with actual teeth. Money laundering with Bitcoin? Just ask Ross Ulbricht how that's going.

The only bigger idiot is the person who moderated your comment as "insightful". Perhaps he's like to buy some Bitcoins and a few special tulips to sweeten the deal.

In a parallel universe...

[Neo-Rio-101]

Mining for bitcoins actually donated processing time to Folding at home and SETI... so instead of getting virtual currency for wasting compute cycles, we'd probably cure cancer and contact aliens instead.

Bitcoin Could be Big Environmental Story

[retroworks]

Nations like India, which have restrictions limiting women's ownership of land, have the highest per capital consumption rate of gold. Gold mining is the single most environmentally destructive man-made activity on the planet (toxics, carbon, and encroachment into rain forests). If families in India can pay dowry with Bitcoin, I'm all for it.

Re:Bitcoin isn't a currency.

[bigdavex]

Its a commodity. Like gold, or silver.

Why?

What need or want does a bitcoin satisfy?

Risks?

[Bert64]

None of these so called "risks" are anything new, the same problems exist with traditional cash.

Re:World Cautions Users On Risk Associated with In

[mlts]

India has its issues, but it is good that -someone- is warning potential investors of the risks of BitCoin. Education is always important, especially the basics like be careful about one's wallet because it can be too easy to lose one's BTC stash forever if it isn't backed up or if a bad guy is able to open it.

What nonsense on land ownership...

[bayankaran]

Nations like India, which have restrictions limiting women's ownership of land,

What nonsense!!! There is no legal restriction on women owning land in India. What are you smoking?
And who are the idiots who mod you up?