Hungary Central Bank Speaks against Bitcoin

“The National Bank of Hungary regards it important to inform current and future users so that consumers would be aware of the risks associated with virtual tender and could decide about its use in that knowledge,” the central bank said in a release.
Supporters of virtual currency praise anonymity of transactions as well as speed of payment due to a lack of an intermediary institution involved. But those perceived benefits carry significant risks, the Hungarian central bank said.
Digital currency, and Bitcoin in particular, is risky since it lacks an issuer–such as a national central bank–that would undertake the obligations and responsibilities of an issuer, the central bank said. It only exists virtually and doesn’t fall under the supervision of any central bank, it added. Virtual money could also be lost or stolen and its value may change suddenly, it also said.
The Hungarian central bank is “comparing apples with oranges,” said Tamas Blummer, founder and former top executive of Hungarian Bitcoin startup firm Bits of Proof. Bits of Proof launched an integrated mobile and web Bitcoin payment processing platform BopShop in Berlin in August last year. Icon Capital Reserve S.A., a Panama-based financial services firm, bought Bits of Proof Zrt. last week. Icon Capital, now with Mr. Blummer as the chief technology officer, is planning to launch a decentralized, digital currency fungible with physical gold.
The Hungarian central bank is comparing two different things — Bitcoin is a cash-type payment and not a checking account-type payment, Mr. Blummer said. Bitcoin, just like cash, could be lost or stolen, he added. But it protects consumers much better than any bank-card payment does, he claimed, since those paying with it don’t share any codes or sensitive information to conduct the transaction. Bitcoin is not backed by any central bank but is backed by the trust of the community that’s using it, Mr. Blummer said. Hungarian firms with interest in Bitcoin and lawyers seeking its legal acceptance in Hungary established the Hungarian Bitcoin Association earlier this year, he added.
The London-based European Banking Authority, which represents national banking supervisors from all 28 European Union countries, warned in December about the perils of virtual currency. Central banks from France to China and Israel have voiced concerns about the potential pitfalls of digital money and its possible use for money laundering and speculative trading. The European Central Bank and the Bank of England have also said they are monitoring the development of virtual currencies.
Germany recognized Bitcoin as “units of account” in August last year, allowing it to be considered as “private money.”
That could serve as an example for Hungary,  Mr. Blummer said. “If it had a more constructive attitude,” Hungary could spearhead and benefit from the inevitable rise of Bitcoin, he added.

via : http://blogs.wsj.com/emergingeurope/2014/02/19/hungary-central-bank-speaks-against-bitcoin/