The prohibition by Bank Indonesia (BI) is aimed at financial technology-based service providers including e-commerce so as not to receive bitcoin.
Processing of virtual currency is also prohibited.
"In the context of the payment system, bitcoin is not a valid means of payment," said Head of Communication Department of Bank Indonesia Agusman Zainal to BBC Indonesia, (7/12).
According to Agusman, it is true that it has been regulated in the Bank Indonesia Regulation on the Implementation of Payment Transaction Processing in 2016.
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Article 34 of the beleid states, "The Provider of Payment System Services is prohibited: (a) processing payment transactions using virtual currency."
Part of the description mentioned virtual currency is digital money issued in addition to the monetary authority obtained by way of mining. Among others are Bitcoin, BlackCoin, Dash, Degecoin, Litecoin, Namecoin, Nxt, Peercoin, Primecoin, Ripple, and Ven.
The Governor of Bank Indonesia, Agus Martowardojo, stated that the prohibition is to implement prudential principles, safeguard business competition, risk control, and consumer protection.
The Governor of Bank Indonesia, Agus Martowardojo, said his agency prohibits bitcoin to maintain business competition, risk control, and consumer protection.
"We prohibit the providers of tekfin (financial technology) and e-commerce and payment system service providers to use and process virtual currency, and work with parties that facilitate transactions using virtual currency," said Agus.
The ban, continued Agus, to prevent crime, such as money laundering, terrorism financing, and maintain the sovereignty of the rupiah as a means of legitimate payment in Indonesia.
The reasons expressed by Agus have a basis. In 2013 the founder of the Silk Road site, Ross Ulbricht was arrested by the American apparatus because his site was caught more on the sale and purchase of drugs than selling bitcoin.
One of the cafes in Ireland that accept bitcoin payouts.
In October 2014, an Indonesian DB student was arrested in Bintaro for buying sabu online and paying it with bitcoin. He ordered the shabu from Mexico.
October 2015, LWK terrorist bombing Mal Alam Sutera request transferred Rp300 million in the form of bitcoin. "The suspect did extortion," said Polda Metro Jaya Dirkrimum Kombes Krishna Murti.
In December 2016, Police Chief Gen. Tito Karnavian mentioned that terrorist group funding is already using the virtual currency. "Some use bitcoin," Tito said at the time.
Police Chief Gen. Tito Karnavian said there were terror suspects in Indonesia who use bitcoin.
The plan of Bank Indonesia will issue more strict rules regarding the use of virtual currency in 2018. "The point will strengthen existing provisions," said Agusman.
BI, continued Agusman, did not work alone, but also took a number of other agencies such as the Financial Services Authority.
"I think this is not a monetary context. (But) the impact to business actors and consumers is the extent to which there is consumer protection," said Agusman.
History of Bitcoins
Bitcoin was originally created by a man who claimed to be named Satoshi Nakamoto in 2009. Then in May 2016, an Australian technology entrepreneur Craig Wright revealed that he was the one who created bitcoin.
Craig Wright who claimed to create bitcoin.
"I played a major role, but also helped several others," Craig told the BBC at the time. The first transaction was to send 10 bitcoins to Hal Finney in January 2009.
Since its inception in 2009, exchange rates or bitcoin valuations continue to increase.
Even in this year's value is increasing crazy. As an illustration, 1 bitcoin is valued at US $ 0.3 in January 2011. And December 7, 2017 to US $ 14,000 (Rp189 million).
Bitcoins price movements in the digital market
It is not clear what the determinants of the rise or fall of the price or the bitcoin exchange rate. When China announced the illegality of bitcoin in September 2017, its exchange price fell from US $ 4,600 to US $ 3,200.
Just like Bank Indonesia, Chinese authorities banned on the grounds of investment risk on the virtual currency. The Chinese government says the virtual money could be used for illegal funding and money laundering.
Indeed financial authorities in different parts of the world have the same concerns. The UK for example calls it a "high-risk and speculative investment."
Although not forbid, some
other countries also issued the same warning. Among others are Singapore, Hong Kong, and Canada. Even the European Central Bank considered it "potentially like the Dutch financial crisis of the 17th century".
With a total of 15 million bitcoin on the market today, it is estimated that the valuation will reach more than US $ 200 billion. The most active countries are American and Japanese.
Some world celebrities claim to have bitcoin as a promising investment tool. Increased bitcoin exchange rates are one of the reasons.
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One of the bitcoin investors who get the most from their ownership is the twins Cameron and Tyler Winklevoss. They first had bitcoins since 2013.
At that time they bought 90,000 bitcoins at a price of one bitcoin US $ 120.
The total funds they spend on bitcoin are US $ 11 million. The money they used to buy it was the result of winning a lawsuit to Mark Zuckerberg for stealing their idea of Facebook worth US $ 65 million.
Right to photoGETTY IMAGESImage caption
Of the US $ 11 million, the Winklevoss twin bitcoins investment is now over US $ 1 billion.
Now the wealth of the Wiklevoss twins is estimated to reach billions of dollars with the price of one bitcoin reaching US $ 14,000. Because since they bought it in 2013, they never used or sold it.
