Attorney General Bill Schuette is advising Michigan citizens to consider all the risks before purchasing any virtual currency, such as "Bitcoin" or "Litecoin."
Schuette says people should know that virtual currency does not have the same safeguards as hard currency. He is advising everyone to educate themselves (quote) "prior to putting their hard-earned dollars into a virtual wallet.”
“Virtual” or “digital” currency, such as Bitcoin and Litecoin, is not issued or backed by the United States or any other government. He notes that it is also unregulated and uninsured, which means that consumers and businesses alike have limited recourse if they have a problem. Unlike the dollar, which is legal tender, no one is required to accept virtual currency as a form of payment.
While not tangible currency, virtual currency is bought by transferring real money through an exchange or to an individual, and is stored on computers or held by the purchaser or a third party in a so-called virtual wallet.
If the marketplace perceives that it has value, virtual currency can be transmitted and exchanged in lieu of hard currency for goods and services.
It can also be exchanged for hard currency.