Virtual currencies such as Bitcoin are expanding the frontiers of our digital economy. How can their potential to stimulate a new form of economy be balanced with the cyber-safety needs of citizens. ?
So called virtual currencies have gained much attention
in recent years and this emerging technology offers significant opportunities for policy-making. The European Central Bank differentiates between two categories of virtual currency, one being electronic money schemes using traditional units and the other whose unites are an invented currency such as a virtual currency. Electronic schemes, linked to traditional money formats, have a clear legal foundation and basis in established institutions.
The key element of many virtual currencies, and in particular the Bitcoin system, is the anonymity of the user of the system. It is due to this level of encryption that a virtual currency such as Bitcoin is in principle much more secure than suing cash, credit and debit cards or direct money transfers between traditional banks. Bitcoin is in fact the first global electronic currency to have even been developed.
Virtual currency could be cheaper, easier and faster than existing methods of payments. For example, user of Bitcoin do not need to use bank account, with the associated credit and security checks that make their use complicated in comparison, simply accessing a digital wallet via an internet connection.
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