Not a safe asset

Bitcoin could be termed the biggest fraud pulled on people all over the world. No government worth its salt anywhere in the world could control it.

However, its value is steadily growing up, pulling more people in to invest in it. The bubble may burst anytime and millions of people would lose their hard-earned money.

Bitcoin, euphemistically called cryptocurrency, was started by Satoshi Nakamoto way back in 2009. A bitcoin is defined by a sequence of digitally signed transactions that began with its creation as a block reward.

Bitcoin transactions are recorded in a virtual public ledger called block chain. The technology is programmed in such a way that only 21 million bitcoins can ever be generated.

The owner of a bitcoin transfers it by digitally signing it over to the next owner using a bitcoin transaction, much like endorsing a traditional bank check.

A payee can examine each previous transaction to verify the chain of ownership. Unlike traditional check endorsements, bitcoin transactions are irreversible, which eliminates risk of chargeback fraud.

There's no central bank to regulate it. It’s digital and functions completely peer to peer. The value of the bitcoin transactions were negotiated by individuals on the bitcointalk forums and exchange platforms.

On August 6 in 2010, a major vulnerability in the bitcoin protocol was spotted wherein transactions weren't properly verified before they were included in the transaction log which let users bypass bitcoin's economic restrictions and create an indefinite number of bitcoins.

On August 15, the vulnerability was exploited with over 184 billion bitcoins being generated in a transaction and sent to two addresses on the network.

Within hours, the transaction was spotted and erased from the transaction log after the bug was fixed and the network forked to an updated version of the bitcoin protocol.

Though it has been in circulation nearly for a decade and its value has been going up from time to time, there is no direct regulation of the bitcoin by any government anywhere in the world though some claim that Singapore has legalised it recently.

In fact, the concept of the virtual currency could be termed the biggest fraud being perpetrated on people. Even the police are clueless about the whole issue of bitcoin.

Since there is no central agency to control its value and nobody knew who is fixing its price, enhancing it from time to time. It is more like demand and supply rule. Someone from somewhere expresses readiness to buy the bitcoin at a certain price and the money is transferred.

Presently, in India the bitcoin is priced over Rs 66,000 and it is expected to go further up in future. Surprisingly, it was quoted at less than Rs 20,000 last year.

Nearly 1,000 bitcoins are being traded in India each day as there is no dearth of speculators in our country. It is high time the regulators took an initiative to end the menace.

Otherwise, it would be the biggest scam even in the history of currency speculation.