Bitcoin is a digital currency, and it is becoming more and more well-known. However, many major banks are still trying to decide how to handle the new currency. Should they ban it? Regulate it? Ignore it? Or simply embrace the new change? Because Bitcoin is a threat to central bankers’ exclusive power to control money, it makes some sense that major banks would be threatened by this currency newcomer.
Major banks around the world vary on how they have decided to react to the digital currency. For example, Finland and Sweden deny that it is a form of currency. Instead, Finland taxes it as an asset. Germany agrees that it is a financial instrument, but does not consider it a form of currency. The United States and the Federal Reserve have specifically stated that they do not have the right to regulate “digital money.” They also do not think the new currency is mature enough to be considered a true currency.
Regardless of how banks handle the Bitcoin, many online merchants are embracing the new form of payment. Businesses now have access to merchant accounts that allow businesses to accept Bitcoins as payment and then turn the Bitcoins into their local currency. For more information about Bitcoin merchant accounts, check out eMerchantBroker.com.
The European Central Bank reports that there are roughly 69,000 daily Bitcoin transactions. This is in marked contrast to the overall number of non-cash payments just in the European Union—274 million transfers each day. They also state that while the Bitcoins do have value, they are not typically used as a “media of exchange,” or used as a currency.
Bitcoin’s value has decreased roughly 70 percent since its all-time high value about one year ago. This volatility may make the argument that Bitcoin is really an investment more likely. Currency will change slightly in the market, but it will not vary significantly the way that Bitcoin has in just the past several months. If people see Bitcoin as an investment, it can never really be considered a “true” currency with a value that will not vary much.
The European Central bank has actually decided that it may introduce its own version of the Bitcoin even though it is not likely to recognize Bitcoin as a currency. They explain that the idea does have a lot of promise, but when the currency is issued by a bank, then it may become more stable. However, some argue that including this type of currency under bank regulation would destroy one of the key attractions—the lack of government intervention. It will be interesting to see how banks will respond to Bitcoin if it becomes more widely used.