Central Banks warn of dangers Bitcoin
While the Chinese government does not officially recognize bitcoin , buyers There are, however , help to fuel a boom in the four -year-old , the virtual currency. Bobby Lee BTC China, the largest market in the country bitcoin , Lee tells Jake what is fueling the high demand .
Central banks and regulators around the world are ratcheting up warnings about bitcoin , since the virtual currency prices soar, more merchants accept for payment and investors pouring money into new businesses related to Bitcoin .
Officials from China and France and the European Union expressed even stronger concern about the potential for speculative trading and money laundering in bitcoin and potential risks to ordinary people that use the currency.
At the same time, a currency analyst issued a positive outlook for Bitcoin investors, while a University of Cyprus announced that he had accepted his first tuition payment in bitcoin .
Conflicting feelings highlight the confusion around four years old , the virtual currency.
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China and France on Thursday issued warnings about the use of bitcoin , saying the virtual money is not offered payment guarantees making a legal tender . Reuters
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Squaring Future of Bitcoin with price
Bitcoin is not backed by a central bank . Rather , it is created through a process called mining complicated computing . Once extracted, the coins can be used for shopping or traded in ports based on worldwide markets unregulated Internet .
The price of a bitcoin has increased this year from less than $ 20 in January to more than $ 1,100 now , based on three popular index CoinDesk exchanges. But the journey has been bumpy .
" Even if bitcoin now eligible to become a credible medium for investment, therefore, that could threaten financial stability, is a clear financial risk for those who are for it," said the Bank of France in a report .
The People's Bank of China said on its website that financial institutions should not take corporate deposits bitcoin - related services or providing insurance or custody. Regulators also said that Chinese exchanges will be required to submit online bitcoin trading records and take steps to address the risks of money laundering associated with virtual currency.
China is considered increasingly important destination for bitcoin .
A recent increase in the price of Bitcoin around the world has been attributed to the growing demand from China, although it is difficult to measure the magnitude of the impact .
European Commissioner in charge of financial regulation , said officers should apply sanctions if follows that unregulated currencies like bitcoin used to commit fraud or other criminal activities.
"We are following the issue of bitcoin very closely," said Michel Barnier. "We remain vigilant and ready to act if necessary. "
Bits and Pieces
Mystery still surrounds Bitcoin . Its creator - or creators - has remained anonymous and specific details about the history of virtual currency remain blurred . Still, buzz is growing. Here is a rough chronology of the evolution of Bitcoin .
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Regulators and lawmakers have raised similar concerns about virtual currencies in recent months .
About 35 virtual currency companies have registered as companies transfer money Network Financial Crimes Enforcement as the unit of the Treasury Department issued guidelines in March that encourages them to do so, according to a spokesman .
Bitcoin is also attracting the attention of traditional Wall Street firms , where analysts have begun issuing research reports that assess their impact on global currencies and payment systems.
David Woo, currency analyst at Bank of America Merrill Lynch issued a report Thursday bitcoin 11 pages in which I put a "maximum fair value" to $ 1,300 in bitcoin and a maximum market capitalization of $ 15 billion . Bitcoin market value is about $ 12.5 billion now , according to the index CoinDesk .
"We bitcoin could become a major means of payment for e-commerce and can emerge as a serious competitor to the traditional providers of money transfer ," Mr. Woo wrote in the report .
Mr Woo said in an interview that wrote the report because it was flooded with questions about Bitcoin clients and colleagues.
The Bank of England is playing down the bitcoin current importance , saying it is not likely " to have a material impact on the objectives of monetary and financial stability [ bank ] in the short term . "
Steven Englander , chief currency strategist at Citigroup Inc., according to a report published last month on bitcoin generates an unusually large amount of customer feedback . The popularity of the note led him to issue another Thursday in which he expressed some skepticism about the long-term prospects of bitcoin , due to the possible emergence of virtual currencies competitors.
Also Thursday, the University of Nicosia in Cyprus said he accepted his first bitcoin payment of tuition. A student from South Africa paid a bitcoin , which earned him $ 910 in the time of payment of the last month, the tuition for the online master's degree in business administration . The university plans to launch next spring 's first MSc in digital currency.
Regulators are also grappling with where bitcoin fits between traditional forms of payment. The Bank of France said bitcoin is not legal tender , as it may deny payment for virtual currency . Nor bitcoin fall under the definition of a means of payment or an electronic currency, issued as no exchange of funds, the Bank of France argued in the report.
The Bank of France warned that even professional speculators should beware because Bitcoin holders have no legal recourse if they are victims of theft from hackers and the convertibility of the currency is not guaranteed .
"The system can collapse at any time if investors want to unwind their positions but are holding portfolios that have become illiquid ," the bank said in its report.
