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Bitcoin’s a risky business for consumers, European Banking Authority warns

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Virtual currencies such as Bitcoin are risky for consumers because there’s no regulatory protection when such currencies are being used for payments or when exchanges fold, the European Banking Authority (EBA) has warned.

In a statement on Friday, the EBA, which is currently trying to figure out whether Bitcoin should be regulated, also said there was “no guarantee that currency values remain stable.” It noted that hackers can sometimes steal digital wallets, and that law enforcement agencies may at any point decide to shut down exchange platforms over money-laundering fears. The authority also said some countries might see Bitcoin as taxable.

While those tracking Bitcoin and its wild fluctuations will probably see all this as an incoming transmission from Captain Obvious, it probably is worth making sure that consumers understand the risk if they intend to get on board.

That said, the warning does occasionally read as though Bitcoin is a form of gambling:

True, Bitcoin is a big speculation game at the moment, but a lot of investment is going into making it a serious currency option for consumers – if and when that happens, regulation had better stay on top of things to make sure it’s a safe option.

3 Responses to “Bitcoin’s a risky business for consumers, European Banking Authority warns”

  1. From my reading the “big investment in Bitcoin” is going into two areas: Mining and exchanges. Buts the mining which keeps it all going.
    If you “mine” then you do so by “proving” the audit trail of your most recently dated bitcoin on the way to “finding” the next encryption pair. Each successful “pair” represents a new bit coin and you can sell the bitcoin by exchanging this “unused” pair for hard currency cash.
    All this is easy enough, the miners “prove” the authenticity of the coins; and so guard against fakes. But who will do this when the 21,000,000 limit of the number of bitcoins is reached?
    Will fakes then become both popular and indistinguishable from the real virtual thing?