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State issues consumer alert over bitcoins

The state Office of Consumer Affairs and Business Regulation issued a consumer alert titled "Buy bitcoins at your own risk."

Some of Bitcoin enthusiast Mike Caldwell's coins are pictured at his office in this file photo. Credit: Reuters Some of Bitcoin enthusiast Mike Caldwell's coins are pictured at his office in this file photo. Credit: Reuters

State consumer advocates issued a warning on Tuesday alerting people about the "risk" of buying bitcoins.

The popular online currency was the subject of a consumer alert issued by the state Office of Consumer Affairs and Business Regulation. The alert was titled "Buy Bitcoins at Your Own Risk."

"First and foremost, if you can't afford to lose the money you have, you should not buy bitcoins," the agency said in its alert. "It’s a high-risk currency because of the volatility in its price."

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The digital currency recently showed volatility when its online price plunged last month after a marketplace announced a halt on withdrawals.

Proponents argue that bitcoins provide a fast and fee-free payment system.

However, warning about the risks, the state agency repeated how bitcoins are not legal tender and are not insured or backed by governments.

"Bitcoins are a type of decentralized virtual currency, meaning they are not issued or backed by the United States or any other government. They are also unregulated and uninsured, which means that consumers and businesses alike have limited recourse if they have a problem," the state agency said.

Follow Michael Naughton on Twitter @metrobosmike.

 
 
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