Central banks, governments and law enforcement agencies have been quick to warn citizens to avoid investing in bitcoin because it comes with inherent risks and threatens the stability of financial markets. This has been a common theme for 2014, and it doesn’t seem likely to cease any time soon.
One of the latest to heed the peer-to-peer decentralized virtual currency industry is the Bank of Latvia and its financial and payment analyst, Deniss Filipovs, who issued a consumer alert and investor guidance Wednesday outlining the dangers of allocating your resources into buying, selling, trading, exchanging or mining for bitcoins and other digital currencies.
Taking the same position as the Financial and Capital Market Commission, Filipovs averred that bitcoin is not issued by a central bank and it is not identified as legal tender with a guaranteed nominal value. This means that if something were to go wrong with a person’s digital holdings then the central bank wouldn’t be held accountable.
Filipovs further explained that bitcoin is not tied to any nation’s traditional currency, which then generates the cause for concern because there are heightened risks, such as a loss of holdings during the exchange process, a lack of protection from the European Union and stolen bitcoins cannot be retrieved.
Although bitcoin, says Filipovs, can be used as a means of trade in a transaction between two agreeing parties, the virtual currency still does not have any official legal status imposed by the United States, the EU, Asian countries or any other state in the world.
The Bank of Latvia’s warning comes as Latvian national air carrier airBaltic quietly announced that it would begin to accept bitcoins as a method of payment from clients – it was criticized this week, though, by adding a 5.99 EUR processing fee on Bitcoin transactions. This led government officials and the central bank to react to the cryptocurrency industry.
Of course, it remains to be seen if airBaltic moves ahead with its latest business move since that the company has been state-owned and the Latvian government has become a 99.8 percent major shareholder in the airline since it bailed out the company in Nov. 2011.
It has been learned that airBaltic has actually established a precedent because other businesses are determined to follow in its footsteps by accepting bitcoins, though it had been reported that Maxima, mobile carrier LMT and social network Draugiem.lv would not process any bitcoins in the immediate future.
At the time of this writing, bitcoin is trading at just under $600, and has fallen throughout Thursday when it was sitting at a little more than $620.
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