Danmarks Nationalbank, the nation’s central bank, has released a briefing note comparing the popular bitcoin virtual currency to “glass beads”.
The statement points out the bitcoin is not money as there is no issuer that stands behind the currency, and that its more akin to a commodity, to which users attach value.
Denmark’s national bank joins other banks around the world in warning users to be wary of the virtual currency.
Banned in some countries
In January, Malaysia’s central bank warned citizens that “the bitcoin is not recognised as legal tender in Malaysia”, and In December last year, the People’s Bank of China banned financial institutions in the country from trading in bitcoin.
“Bitcoin is a virtual currency without any value anchor and hence it may rise sharply or fall very suddenly,” said Hugo Frey Jensen, the governor of the Danish national bank in the statement. “A core property of money is that its value is stable so that its purchasing power does not change markedly from day to day.”
Jensen said that the use of bitcoin as a means of payment remains “very limited”.
The European Banking Authority has also issued warnings about digital currencies, and some have suggested that the authority is looking into the possibility of regulating bitcoin.