13 February 2018
Bitcoin has been labelled a virtual currency. But what actually is it and what does it mean for real currencies?
Essentially, it is a digital token that can be exchanged electronically. It does not exist in physical form. Bitcoins are created and kept track of by a network of computers using complex mathematical formulas, rather than by a single authority or organisation.
So virtual, yes, but currency, no. Why not?
Bitcoin is a speculative asset. In other words, it is something that you can gamble on to make a profit, but with a risk that you will lose your investment.
It is not the ECB’s responsibility to ban or regulate bitcoin or other cryptocurrencies. But, given the lack of consumer protection, it is important to exercise caution.