Money Reimagined: Bitcoin’s Warning for Central Banks

A warning from the Bank of Lebanon, issued in mid-December, ran through a list of risks related to Bitcoin and cryptocurrencies in general. You probably have an idea already of what was said: · Transactions are unregulated, and thus no one can account for or recover losses. · Speculation has lead to price volatility. · Criminals can commit crimes with such money. · Terrorists can commit acts of terror with such money. · Money launderers can launder money with … well, you know. While not outright banning Bitcoin’s use, “the central bank of Lebanon warns against purchasing, keeping or using....

Despite what seems to be a promising bitcoin ecosystem developing in South American, the Argentinian Central Bank has gone ahead and issued a warning on the perils of getting involved with digital currencies - the biggest of which being bitcoin. The warning makes reference to issues that have long been discussed by central banks. Digital currency is most certainly not backed by any central authority (by design), and as such, aren't considered to be legal tender. Despite that, merchants are still finding themselves tremendously interested in the promise that bitcoin holds. No excessive fees....

The Central Bank of Brazil (Banco Central do Brasil) has issued a digital currency warning, joining the central banks of India, China and many other large economies across the globe in outlining risks associated with digital currencies. The Brazilian warning does not bring anything new to the table, it reads like similar statements issued by other national regulators over the past few months. The bank points out that digital currencies should not be confused with electronic money, as defined by Brazilian legislation. Unlike digital currencies, electronic money is governed by various....

The Dutch central bank (DNB) has issued a warning on bitcoin aimed at banks and other financial institutions in the country. Unlike most warnings issued by regulators and central banks across the globe, the Dutch warning does not address end-users of digital currency. Instead, the central bank clearly states that banks and payment institutions should be aware of integrity risks derived from processing transactions related to digital currencies. Anonymity bad for business? The warning (dated 5th June 2014) points out that digital currencies offer a high degree of anonymity so financial....

Bitcoin may not be "digital gold" just yet. But with institutions accepting the business case and the price rising, it's well on the way.