The Reserve Bank today said that the virtual currencies like bit coins are highly speculative and unregulated instruments and cautioned users about the potential financial, operational and legal security risks.The RBI in a release said that the creation, trading or usage of 'Decentralized Digital Currency' or 'Virtual Currency' (VCs), including Bit coins, litecoins, bbq coins and doge coins as a medium for payment are not authorized by any central bank or monetary authority.The release further said that no regulatory approvals, registration or authorization is stated to have been obtained by the entities concerned for carrying out such activities. It stated that the virtual currencies have no underlying or backing of any assets and their value seems to be a matter of speculation. The users are exposed to potential losses on account of volatility in value.RBI cautioned that since the VCs are stored in digital or electronic media, they are prone to losses arising out of hacking, loss of password, compromise of access credentials and malware attack.The central bank said that there is no established framework for recourse to customer problems or disputes. The RBI added that it is presently examining the issues associated with the usage, holding and trading of VCs under the extant legal and regulatory framework of the country, including Foreign Exchange and Payment Systems laws and regulations.