The Daily Telegraph

Money worries Why Bitcoin is giving cause for concern

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Q What is Bitcoin?

A Bitcoin is a virtual currency that was created in 2009 by an unknown computer programmer. Individual Bitcoins are created by computer code and can be bought and sold online via “digital wallets” where they are stored. The price of Bitcoin goes up and down in the same way as any other currency, although unlike major currencies, it is not regulated.

Q

Why are banks worried about people buying Bitcoin on credit cards?

A

The price of Bitcoin has fluctuated wildly in recent months, which means that some investors have seen huge gains, while others have suffered huge losses. Banks will be worried that consumers with big credit card debts are investing in Bitcoin to try to get out of debt, when in reality it could leave them in a worse position. The banks are also acting to minimise their own exposure. If the customer is unable to repay a Bitcoin debt, the bank will have to write off the debt.

Q

What are the other fears surroundin­g Bitcoin?

A

There are concerns that because it can be bought and sold anonymousl­y, Bitcoin and other cryptocurr­encies are being used to fund illegal activities such as money laundering and the purchase of drugs and weapons.

Q

What is the Government doing to protect people from the dangers of Bitcoin?

A

The Treasury is planning to regulate Bitcoin and introduce new rules which would force traders in so-called cryptocurr­encies to disclose their identities and report suspicious activity.

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