★ Should Bitcoin, Etherium and other virtual cryptocurrencies accumulators be worried with these new developments?
★ There are obvious reasons why banks and governments hate cryptocurrencies and here they are……..
In September, Chinese regulators passed a “comprehensive ban” on platforms allowing people to buy or sell virtual currency like Bitcoin or Etherium
But obviously, China is not the only country placing the ban, the State Bank of Vietnam has also followed suit by prohibiting the use of Bitcoin and other virtual cryptocurrencies for payments in the country.
The country’s state bank issued a formal statement prohibiting the use of virtual currencies to pay for goods and services. The punishment for offering and accepting payments in Bitcoin can run to over £6,000.
The bank doesn’t expressly say why it is banning the use of Bitcoin but rather highlights regular forms of payment: cheques, credit cards, etc as acceptable.
“Bitcoin virtual currency and other similar is not lawful means of payment in Vietnam; The issuance, supply, use of bitcoin and other similar virtual currency as a means of payment is prohibited in Vietnam,” explains the government-run bank.
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According to the Wall Street Journal , the country is actively shutting down online Bitcoin exchanges (digital marketplaces) and stopping peer-to-peer transactions to try and limit the spread of the cryptocurrency.
WHY ARE BANKS AND GOVERNMENT SCARED OF BITCOIN?
Bitcoin and other decentralised cryptocurrencies allow people to trade directly with each other, cutting out the need for a middleman which, in traditional commerce, is a bank.
Banks generally charge fees for doing anything with money, even just holding on to it. That’s because the banks have created a level of trust that transactions pass smoothly and everything is recorded and accounted for correctly.
But as the financial crisis of 2008 proved, banks are not above abusing trust to line their own pockets.
That’s what led to the development of cryptocurrencies like Bitcoin in 2009.
The key to its success is something called the blockchain. The blockchain is a means of solving the double-spending problem: which is that because the currency is digital it is open to being copied and spent more than once – something banks stop with physical currency.
However, the blockchain acts as a digital ledger, whereby every single transaction (called a block) is securely linked together using cryptography and encryption. It’s verifiable, available to everyone who owns Bitcoin and is immune to fraud and hacking – unlike centralised banks.
It enables one digital wallet (that can be stored on a phone) to directly connect with another securely and process a transaction.
As such, it removes the need for any kind of traditional bank or regulator.
Unsurprisingly, banks aren’t happy about being made obsolete and – with help from governments – are trying to clamp down on cryptocurrencies after initially dismissing them out of hand.
According to the Financial Times , even British banks are starting to shun companies that deal in Bitcoin.
Ed Pownall from Coingeek said: “A concept as disruptive to the banking sector status quo as Bitcoin has translated into considerable resistance to its very existence, and therefore, we know that many have an agenda to kill it at birth,” he said.
THE DARK SIDE OF BITCOIN
Ransomware often requests Bitcoin payment to release hostage computers
Of course, the anonymous nature of Bitcoin means that it can also be used for illegal purchases – such as buying and selling drugs or weaponry.
It’s also frequently requested for ransom payments by hackers who takeover computer systems. This is what happened to the NHS earlier this year.
What is for sure is that the currency doesn’t show any sign of slowing down.
At the moment, one bitcoin is equal to £4,695.
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