Should You invest in Bitcoins?

bitcoin_digitalThe press conference conducted in Mumbai by the Bitcoin alliance ended up with the media reporting ” Bitcoins Alliance India advices public to keep off, seeks legal clarity” (Economic Times)

Investors need to look at what are the legal and financial risks. After the above announcement, Bitcoin moved up to cross US$1000 again with the announcement that Zynga which manages many of the popular Facebook games accepting Bitcoins for many of the requirements of the games such as Farmville. This development is very significant since this indicates that many other online operators may start accepting Bitcoins. This will lead to an increased demand for Bitcoins and it will possibly ride over the uncertainties arising out of the regulatory caution in India.

To answer the question “Should you invest in Bitcoins?” one has to keep in mind the non financial legal risks. The main legal risk is that purchases  may lead to an investor being in the radar of the Enforcement Directorate. If the purchases are made strictly out of legal funds and the seller is properly identified, the risk should be lower. However if there is any ED enquiry, there could be other unpleasant consequences which an ordinary investor may consider as annoying.

I suppose that it will take a month for the confusion to settle down. However, in the long run RBI may reconcile to the fact that Bitcoin is there to stay as a currency of the virtual world and may not go to the extent of bringing about amendments to law just for the fear of Bitcoins.


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About Vijayashankar Na

Naavi is a veteran Cyber Law specialist in India and is presently working from Bangalore as an Information Assurance Consultant. Pioneered concepts such as ITA 2008 compliance, Naavi is also the founder of Cyber Law College, a virtual Cyber Law Education institution. He now has been focusing on the projects such as Secure Digital India and Cyber Insurance
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