Investors everywhere (this is not a problem specific to India) are notorious for jumping on the newest, shiniest bandwagons without necessarily understanding what lies underneath the hood.What is a problem specific to India is the dichotomy of its burgeoning investor community lining up with alacrity for their golden tickets, without any semblance of a safety net to catch them if they fall.With Bitcoin (and other crypto-currencies), that fall has the potential to be their hardest yet. As prices surge to tantalising new heights, constantly breaking their own records, Bitcoin FoMO is very real — and there is clear potential, as there are pitfalls of investing in what some have carelessly called Gold 2.0.Rags to riches Bitcoin investment stories are, of course, plastered across the web and beyond, drawing investors by the boatload, and why not, when value rises 900 per cent in a year, albeit with fluctuations between 44 (up) and 25 (down) percent. What isn’t easy to come by when Bitcoin fever takes hold, is the ominous flip side.Vili Lehdonvirta (who may or may not be Satoshi Nakamoto) is among many others rightfully labelled experts who have for some time now been warning of the eyeball frenzy and an approaching proverbial “big short” moment.Closer home, Pramod Emjay of CryptoMe Payment Technologies and formerly the Dogecoin Foundation, shares this concern.In our discussion on crypto-currency exchanges in India, he tells me how “any exchange worth its salt knows that it’s supplying the shovels in this gold rush. It is stupid to assume this will go on forever”. And while it may admittedly be the wave of the future, for the time being, a gold rush is what it is — of which there will be both casualties and collateral damage. You may have forgotten Mt. Gox for example, but its clients have not.Bitcoin, of course, is only the flag-bearer, and gets most of the attention, good and bad. In all there are over a thousand publicly traded coins, and the advent of Initial Coin Offerings opens up new fronts for slapdash investments. As the world once again leaps before looking, parallels to the sub-prime crisis and the dotcom bubble are not unwarranted. Fed enough quick-buck hysteria, history will repeat itself.Commercially, prospective Indian investors need to dig deep and understand how Bitcoin infrastructure, buying, storing and pricing actually works. A lack of adequate local mining infrastructure for instance, means eye-watering premiums over global prices (30 per cent is the latest figure doing the rounds) currently apply for Indian purchases.On the legal front, the Indian government has on several instances in the past, through the Reserve Bank, the Securities and Exchange Board of India and recently the Finance Minister himself, reminded the country that crypto-currencies do not have legal sanction. While some industry stakeholders have stretched this wait-and-watch to claims that a hard stance is all but impossible, such exuberance is exaggerated and has little evidence or precedent.There are, however, enough and more examples of reactive legislation ranging from public liability to data privacy, and everything in between. In a worst-case scenario, public issue and private placement, exchange control and national security considerations create a minefield that can cause governments to take sudden and radical steps, saying only that “you were warned”.Where does this leave the Bitcoin investor legally? At best, what your purchase can be likened to a commodity — furniture, only furniture doesn’t (usually) cost you $13,000 apiece. Careless moves with wallets can cause your investments irreversibly going up in smoke, and data breaches associated with these wallets also have limited legal and practical recourse.