Saturday January 4, 2014
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The worry over bitcoin stemmed from its lack of backing by any central bank or government, or physical assets, as its value depends solely on people’s confidence of the currency. — Reuters picThe worry over bitcoin stemmed from its lack of backing by any central bank or government, or physical assets, as its value depends solely on people’s confidence of the currency. — Reuters picKUALA LUMPUR, Jan 4 — Bitcoin is not legal tender in Malaysia, Bank Negara Malaysia (BNM) said as use of the digital currency gains popularity among speculators and investors.

BNM issued the statement in the wake of warnings by several other central banks worldwide, but stopped short of banning the currency.

“The Bitcoin is not recognised as legal tender in Malaysia. The Central Bank does not regulate the operations of Bitcoin,” it said in a statement yesterday. 

“The public is therefore advised to be cautious of the risks associated with the usage of such digital currency.”

The worry over bitcoin stemmed from its lack of backing by any central bank or government, or physical assets, as its value depends solely on people’s confidence of the currency.

Bitcoin (with a capital ‘B’) also refers to an open source peer-to-peer system regulating the virtual currency that was introduced in 2009.

However, commercial use has so far remained small compared to speculation activities, causing price volatility.

The virtual money is regarded as the first “cryptocurrency” in the world.

Cryptography is used to control the creation and transfer of the digital money, with transactions recorded on a shared public database rather than with an exchange of notes or tokens.

The Wall Street Journal (WSJ) reported 16 retailers in Singapore which accept the currency, citing CoinMap, a website listing such companies or vendors.

The only Malaysian merchant on the list is shared workspace Nook in Bangsar, Kuala Lumpur, where customers can pay for good and services ranging from coffee to office business services with the cryptocurrency.

“There is huge potential in bitcoin in spite of the negative flak... We view this payment option just as how we view barter trade. It isn’t regulated, but it can be accepted. So why not the same for Bitcoins?” Nook owner Daniel Yap told WSJ.

Last month, the Bank of France warned French citizens of the risks related to Bitcoin, noting its volatility and difficulty in converting the digital money to real cash. 

In the same month, China moved to ban the currency, which had resulted in a complete halt of trading on BTC China, the world’s biggest Bitcoin exchange, as it can no longer convert the Chinese yuan to bitcoin.

Following the news, the value of one bitcoin fell as low as US$421 (RM1,383), compared to the all time high of US$1,250 (RM4,108) in November, according to Hong Kong newspaper, South China Morning Post.

The current value of one unit of bitcoin today stands at RM2,865, according to currency converter site XE.com.

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