Reserve Bank of India (RBI) Deputy Governor cautioned against virtual currencies such as Bitcoin, stating that they pose potential financial, legal, customer protection and security-related risks.
Various risks involved are as follows
1. Virtual currencies being in digital form are stored in digital/ electronic media and they are prone to losses arising out of hacking, loss of password, compromise of access credentials and malware attack.
2. 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.
3. Value seems to be a matter of speculation and use by people.
4. Legal status is definitely not there. While this is a purported objective of a VC, it puts a natural limit for its progression.
5. The usage of VCs for illicit and illegal activities is also uncomfortably large.