Will you be able to withdraw 5 bitcoins to INR in one shot?

Although his Rs 15,000 investment in ATC Coin quickly grew to Rs 1.82 lakh, Pethe started having doubts when he tried to withdraw Rs 5,000 from his holdings. He was unable to execute the sell order smoothly. The computer screen just flashed ‘operational error’ messages. When that was resolved, and he was finally able to sell them, the money wasn’t credited to his bank account right away. “I finally received the money three months later, that too after many follow ups with the firm. I am not sure if I’ll be able to recover my remaining investment in this scheme,” he says.

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1. Extreme volatility

Investing in cryptocurrencies involves very high risk, as prices have been extremely volatile. Many experts are sceptical about bitcoin as an investment primarily because there is nothing for them to analyse. Vivek Belgavi, Partner and Fintech Leader, PwC says, “There isn’t enough of an ecosystem surrounding bitcoins to allow fundamental analysts to study it as an investment. People are therefore investing with imperfect information and joining the her ..

2. Neither commodity, nor currency

The lack of clarity about its origin is another big issue related to bitcoin. In olden days, highly priced metals like gold, silver, etc. were used as currencies. Then came currencies printed by governments (or central banks) and these are called ‘fiat currencies’. Though its proponents claim that cryptocurrency is ‘mined’ using complex mathematical formulae, they are reluctant to call it a commodity. They also claim that it is not control ..

3. Don’t invest if you don’t understand

Some global bankers and experts have warned investors against investing in cryptocurrencies, because they are of the opinion that it is nothing but a bubble that is just about ready to burst. Jamie Dimon, CEO, JP Morgan, for instance, has recently expressed his doubts about the value of bitcoins, saying “It’s worse than tulip bulbs. It won’t end well. Someone is going to get killed.” However, owners and operators of bitcoin exchanges ..

4. An unregulated space

Unlike other investment avenues, cryptocurrencies are not regulated by government entities or banks. “There is no authority like Sebi that you can approach for grievance redressal,” says Vikram Pandya, Director, Fintech, S.P. Jain School of Global Management. Sharma concurs, “If we buy something with a credit card and get ripped off, we can call the bank and ask to be compensated. But if we get ripped off in a bitcoin transaction, it is impossible to.

5. The issue of legality

One major hurdle in the path of Indian investors who are interested in investing in cryptocurrency, is the confusion about its legal status. While they haven’t been declared illegal, cryptocurrencies are not recognised by the Reserve Bank of India (RBI) or any other authority in India, as a ‘currency’. In December 2013, the RBI issued a press release cautioning users, holders and traders of virtual currencies, including bitcoins, about the potential ..

6. Ponzi schemes abound

Aside from the operational issues of trading in cryptocurrencies, there is also a high risk of fraud. There is still a good deal of misinformation and lack of clarity regarding bitcoin trading, and fraudsters have taken advantage of this to launch Ponzi schemes, which promise ‘guaranteed high returns’. Some companies claim to double the initial investment within a very short period of time. “The growing use of virtual currencies in the global marketp.