Bitcoin, the global virtual currency that is creating a big buzz, is already being used by a certain section of investors in the State for online speculative trading.
Across India, a handful of retail outlets have expressed their willingness to accept bitcoins, but none in Tamil Nadu has been as adventurous. In other words, the scope to actualise the worth of the bitcoin currency you hold in your ‘wallet’ - a digital account where one stores the virtual bitcoins as ciphered computer codes - is pretty slim.
However, a few investors in the State are exploring the possibility of investing in bitcoins. “Investing in bitcoins is not very popular yet as it is not legal tender. But a section of investors, who want to keep their investments out of the income tax radar, prefer bitcoins. A few stock brokering companies do offer this option,” said a stock broker working in a major firm on condition of anonymity.
“Interest in bitcoins shot up after media reports about its dramatic rise in value, with investors making a windfall. But we explain to wannabe investors that the value of bitcoins is very volatile. There are instances where bitcoin exchanges simply refuse to buy the virtual currency when the prices are high,” said Siva Prakash, a city-based stock broker.
But some sections of investors are already pumping lakhs of rupees to buy this virtual currency for various reasons. “Some think it is just cool to own bitcoins. These investors are mainly from the affluent sections. They just want to possess it because of the hype,” Prakash added.
There are two ways of investing in bitcoins - buy them by paying real currency or take the Cloud Hashing route. For Cloud Hashing, you need to invest in hardware that would “mine” bitcoins by computationally generating them.
Experts warn against investing in Cloud Hashing services, which offer “mining contracts” through which you can earn bitcoins. “In these schemes you invest money to buy computation hardware to mine the currencies. In most cases, the initial returns are decent. But in the long run, the investment in enhancing the computation hardware overruns the returns and one starts losing all the initial gains subsequently,” said J Prasanna, head, TechCORE, Cyber Security & Privacy Foundation.
Incidentally, a Cloud Hashing company recently claimed that its headquarter was in Tirunelveli district, added Prasanna.