Although the acceptance of Bitcoin has grown wider in the past few months, doubts still remain over its international legitimacy, as China has recently banned banks from handling transactions involving the alternative currency.
In a notice posted by the People’s Bank of China, it stated that the ban was imposed because Bitcoins are not backed by any nation or central authority:
“At this stage, financial institutions and payment institutions are not allowed to Bitcoin price for the product or service, may not be sold or traded bitcoins as a central counterparty shall not be covered with Bitcoin-related insurance business or insurance will be included Bitcoin range not indirectly provide customers with Bitcoins other services.”
Despite this however, individuals are still free to trade in the coins, though they should be aware of the risks involved with the currency.
But could the United States go the same way?
“I wouldn’t eliminate possibilities that they [China's authorities] issue a ban on cryptocurrencies, nor the USA,” said Sunny King, an architect of rival currency, peercoin. “These things are always possible, even if you don’t think it’s likely,” she continued.
Though Peercoin seem to be taking a more conservative view of the future, there is evidence to believe that the US will be more open to Bitcoins in the future,after a hearing in the Senate last month, lawmakers signalled that Bitcoin could be one day accepted as a legitimate alternative payment.
To alleviate concerns further, according to a report published by the Bank of America, Bitcoin could evenone day be officially accepted as the future currency of internet transactions:
“We believe Bitcoin can become a major means of payment for e-commerce and may emerge as a serious competitor to traditional money transfer providers,” the report states. “As a medium of exchange, Bitcoin has clear potential for growth, in our view.”
The only major problem that the report foreseeshowever, is the currency’s relationship with governments around the world, stating that if states were to tie the currency down with regulation, long-term and medium storage for wealth could prove unsuitable.
In addition to this, the bank suggests that the security of the currency is more open to hacking, rendering savings impoverished or even worthless, depending on the extent of the hack. After all, if your online ‘wallet’ is stolen, there is almost nothing you can do about it.
Backing, encrypting and using secure locations for a virtual wallet is always advised. But, as Bassam Salem suggests, universal use of the currency, could prove worthwhile for everyone in the event of financial downturn:
“The natural question is why such high-growth economies, led by China, would want to depend on a currency completely beyond their control as their store of wealth.
“The even more natural answer is that the pressure to create a global currency not controlled by a single nation or union will rise sharply over the coming years. A solution like Bitcoin, whether the perfect solution or not, might be preferable to some than a centrally-controlled dollar.”
Perhaps that is why, he suggests, the Chinese government has not discounted the currency in totality.
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