[Lamplighter]

Currency ?
Commodity ?
Barter chip ?


NY Times
WILLIAM ALDEN
December 5, 2013

For Bitcoin, a Setback in China and an Endorsement on Wall Street

China has thrown some cold water on Bitcoin,
the popular virtual currency that has gained many adherents in the country.

The Chinese government on Thursday moved to restrict banks from using Bitcoin in transactions,
declaring that it was not a true currency at all, The New York Times reports.<snip>

The price of Bitcoin, which has surged in recent months and is characterized by bouts of volatility,
dropped on the news. After reaching a high of $1,240, the price fell to around $1,085 on Thursday,
at one point touching a low of $870, according to the Mt.Gox exchange.

At the same time, China said that investors were free to speculate on Bitcoin at their own risk.
“Ordinary members of the public have the freedom to participate in Bitcoin transactions
as a kind of commodity trading activity on the Internet,
provided they assume the risks themselves,” the statement said.

But while hopes of a Chinese seal of approval have been dashed,
Bitcoin is gaining some institutional respect in the United States.
In a move that appears to be unique among Wall Street firms,
Bank of America Merrill Lynch has begun to cover Bitcoin,
saying in a research report on Thursday that it could be useful in e-commerce and money transfers.

“We believe Bitcoin can become a major means of payment for e-commerce and may
emerge as a serious competitor to traditional money transfer providers,”
said the report by Bank of America currency strategists
led by David Woo.
“As a medium of exchange, Bitcoin has clear potential for growth, in our view.”

Still, some monetary policy experts are skeptical. Unlike conventional currencies,
Bitcoin is not backed by a central bank or government.

But then if you want something the local gendarmes don't want you to have...

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