Against the backdrop of rising acceptance of bitcoin, an online based virtual or crypto currency, Bangladesh Bank has issued a cautionary notice asking all to refrain from transacting it. The central bank termed its use illegal.
Very few in Bangladesh know that bitcoin is being traded on various exchange platforms in the country. The central bank said this is not a legal currency as this is not issued by any authorised entity of any country in the world. So, any financial claim against this currency doesn't have any recognition, it said.
Bitcoin was created in 2009 by an unknown person. It can be used to book hotels on Expedia, shop for furniture on Overstock and buy Xbox games. But much of the hype is about getting rich by trading it.
Bitcoins are generally used to buy merchandise anonymously. International payments through bitcoin is said to be easy and cheap because it is not tied to any country or is subject to regulation. Small businesses like them because there are no credit card fees. Some people just buy bitcoins as an investment, hoping they would go up in value.
What is easy about bitcoin is that people can send it to each other using mobile apps or their computers. It's similar to sending cash digitally. It is stored in a 'digital wallet', which exists either in the cloud or on a user's computer. The wallet is a kind of virtual bank account that allows users to send or receive bitcoins, pay for goods or save their money. Unlike bank accounts, bitcoin wallets are not insured.
Though each bitcoin transaction is recorded in a public log, names of buyers and sellers are never revealed - only their wallet IDs. While that keeps bitcoin users' transactions private, it also lets them buy or sell anything without easily tracing it back to them.
Many consider bitcoin as the world's first decentralised digital person-to-person crypto currency and a revolution in the present currency market. This virtual currency is gaining huge popularity worldwide. Countries that had initially banned bitcoin are now looking to legalise it.
Initially, bitcoin faced a lot of criticism and was considered to be a scam due to its several negative features. But over time when experts from various sectors started examining it, they understood the power of digital currencies and started to take it in a positive way.
What is worrying is that no one knows about future mobility of bitcoin. It is mostly unregulated, but some countries like Japan, China and Australia have begun introducing regulations. Most governments around the globe are concerned about taxation and their lack of control over the currency.
On the other hand, bitcoin prices are very volatile and increases or decreases at a very quick pace. Speculators wish to take advantage of it but genuine investors think it too risky. Also, bitcoin software is still in beta with many incomplete features in active development.
The use of bitcoin is banned in most countries of the world. As such, many bitcoin wallets and companies were shut down. If anyone loses wallet which had bitcoin stored in it, he will lose all bitcoins stored in his wallet for ever. In case of a stolen credit or debit card, one can call the bank to cancel the card and request for a new one. As bitcoin is decentralised and no one has control over it, there is no way to recover it.
Bitcoin is believed to be widely used for money laundering. People operating money laundering do not want to reveal their personal information, and get payment secured through bitcoin.
It is now evident that the use of bitcoins has both advantages and disadvantages. However, it is up to the people and society in what way they want to use it. New tools, features, and services are being developed to make bitcoin, at least, more secure.
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