Bitcoin is the first, and the biggest, “cryptocurrency” – a decentralised tradeable digital asset. Whether it is a bad investment is the big question. Bitcoin can only be used as a medium of exchange and in practice has been far more important for the dark economy than it has for most legitimate uses. The lack of any central authority makes bitcoin remarkably resilient to censorship, corruption – or regulation. That means it has attracted a range of backers, from libertarian monetarists who enjoy the idea of a currency with no inflation and no central bank, to drug dealers who like the fact that it is hard (but not impossible) to trace a bitcoin transaction back to a physical person.
“There is a strong case for policy intervention. Appropriate authorities have a duty to educate and protect investors and consumers, and need to be prepared to act.
Carstens, a former governor of Mexico’s central bank, said that despite the meteoric rise of bitcoin, cryptocurrencies were merely pretending to be currencies and were unsafe, potentially facilitating tax evasion, money laundering and criminal finance.
As the head of the body that represents the world’s central banks, his comments are the clearest sign yet that global regulators are preparing a crackdown on bitcoin, the price of which rose by 900% last year, making it the best-performing asset of 2017. It hit a peak of almost $20,000 in the week before Christmas.
Lloyds Bank bans customers from buying bitcoins using credit cards
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However, it has fallen by more than 50% since the beginning of 2018, as investors grow increasingly fearful of intervention by regulators.
Bitcoin is not recognised by any central bank. It allows people to bypass banks and traditional payment methods to pay for goods and services.
Carstens said central banks should in particular pay attention to the ties linking cryptocurrencies to real currencies, to ensure the relationship was “not parasitic”.
His comments follow a string of warnings on bitcoin from authorities and economists around the world, including India, the US and South Korea. Facebook has banned bitcoin and other cryptocurrency adverts on its site.
On Monday Lloyds Banking Group and Virgin Money banned customers from using its credit cards to buy bitcoin, amid fears the banks could be liable if the cryptocurrency’s value implodes.
Source:[ The Guardian!]
