The state of Connecticut has become the latest U.S. state to issue a consumer alert warning about the risks posed by the peer-to-peer decentralized virtual currency bitcoin.
According to a press release Monday, the Connecticut Department of Banking posted an investor advisory highlighting certain hazards and possibilities that come with buying, selling, trading and investing your money into the digital currency.
“Unlike traditional currency, these alternatives typically are not backed by tangible assets, are not issued by a governmental authority and are subject to little or no regulation,” said Commissioner Howard Pitkin in a statement.
One of the biggest concerns that Pitkin maintained was the wild price swings and volatility of bitcoin. For instance, the alert cited the enormous growth that bitcoin experienced last year: $100 in July 2013 and then soaring to as high as $1,200 a few months later – at the time of this writing, bitcoin is trading at just under $450.
It also noted of the collapse of Mt. Gox, the former bitcoin exchange platform that used to be the biggest in the world.
The Connecticut banking department stated that bitcoin does not come with proper regulations, it is not backed by any government or central bank and it is privy to theft. “Individuals should [be] aware that using or investing in virtual currency presents very real risks, including a total loss of value.”
The Nutmeg State follows the same route that other states have taken preceding this news release. Several states, including Missouri, Montana, Idaho, Iowa and Tennessee, have been explaining to consumers and warning them about bitcoin and other virtual currencies.
