A major blow for Bitcoin, the North American Securities Administrators Association (NASAA) today expanded its annual listing of financial products, practices and services that threaten to trap unsuspecting investors to include lurking dangers facing small business owners, has included digital currencies like Bitcoin in it.
In its release NASAA said that virtual reality may exist only in science fiction, but consumers now are able to purchase goods and services with virtual money such as Bitcoin, PP Coin and other digital currencies.
Bitcoin Not Backed By Tangible Asset
The organization opines that unlike traditional coinage, virtual currencies like Bitcoin are not backed by tangible assets and not even issued by a governmental authority and is subject to little or no regulation. However, critics say that even Fiat is not backed by a tangible asset after the gold standard vanished.
The NASAA admits that the value of Bitcoins and other digital currencies is highly volatile and the concept behind the currency is difficult to understand even for sophisticated financial experts given the complicated mathematical algorithms that determine when new blocks of coins will be released.
Volatility a Major Issue
According to NASAA the volatility of Bitcoin and less understanding about the currency have generated fertile ground for scam artists to capitalize on the increasing popularity and acceptance of digital currencies and for that reason the organization warns investors that they should be aware when investing.
The organization suggests that investments that incorporate abstract money systems present very real risks, including the possibility of virtual reality leaving an investor virtually broke. However, many Bitcoin observers believe that it is very unfortunate to include Bitcoin in the list as it will discourage investors and traders.
Warning Not About Using Bitcoin but About Investment
Director of Communications for NASAA, Bob Webster, however, does not share the view that the expanded list and inclusion of Bitcoin in it will in any way discourage users as he opines that the warning was not about using Bitcoins or other virtual currencies. He says the list is to tell investors about con artists who are using Bitcoin as a cover or investment lure.
Bob Webster says that the expanded list which includes digital currencies like Bitcoin in it will raise some flags and put this on investors watch. The organization understands that it is duty bound to warn investors and ask them to learn and understand about their investments, particularly the ones that are quite complex even for sophisticated investors.
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