People who use bitcoin are responsible for their own losses, the European banking regulator said today, in an official warning to consumers about the dangers of using the unregulated online currency.
According to the European Banking Agency (EBA), there is no protection or compensation for people whose "digital wallets" are hacked or whose transfer of virtual money goes the wrong way, writes the "Toronto Sun" newspaper.
A similar warning was issued by the French central bank and the Chinese central bank.
The EBA did not ask consumers not to use online currency markets, but told them that if their wallets were emptied, they would have no protection, such as the compensation usually paid to deposit holders when a European bank fails.
"At the moment, there is no clear regulatory protection in the EU to protect consumers from financial losses, in the event that a platform that exchanges or stores virtual currencies fails or goes out of business," the EBA said in a statement.
Bitcoin is not backed by any central bank or government of a country, and its value depends on people's trust in that currency.
This currency is accepted by the general public, but has yet to become an accepted payment method on the websites of large retail companies, such as Amazon.
The value of bitcoin rose to above US$1.000 last month, a 400 percent increase in just one month, fueling fears of a currency crash.
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