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Another Country Adds to the Bitcoin Pain: You're Not Real Money!

Jessica Alling
December 18, 2013

Norway to Bitcoin: "Get real!"

The dictionary defines money as something that's generally accepted as a medium of exchange, a measure of value, or a method of payment.

For those who support the use of bitcoins as a legitimate form of money or currency, you may find you have new opponents: Thailand, China, and Norway. With various governments taking a firm stand on the bitcoin debate, is the crypto-currency on the chopping block?

The debate
Though bitcoins have been circulating since early 2009, the anonymous virtual currency has only recently gained huge support, with trading propelling it higher than the price of gold in late November. The true debate stems from the fact that the currency's value is based solely on what traders are willing to pay for it. Without a tangible asset linked to the value of the currency, there are plenty of concerns that the value could collapse at the slightest hiccup.

And that's exactly what happened this morning, after it was announced that China's largest exchange, BTC China, will no longer take orders in Chinese currency after the government demanded that businesses stop accepting bitcoins as a form of payment. The virtual currency's value dropped by nearly half on the news. 

More where that came from
China isn't the only foreign government taking a firm stance on its opinion of the virtual currency. Thailand's government deemed the use of bitcoins illegal because of a lack of applicable laws in force. And now Norway, the richest of the Scandinavian countries, has come out stating that it does not recognize bitcoins as legitimate currency.

Norway's director general of taxation, Hans Christian Holte, stated that bitcoins are not actually a currency but an asset. So the rise and fall of value would be treated as such, with gains being taxed like any normal capital gain. Businesses would also be taxed at a 25% sales tax. The statement follows closely after one released by the German government. The decision may not be final, as Holte works with other international regulators to further develop laws for the currency, but for now the tally for governments against bitcoins as a currency is growing.

In the U.S., the debate is widely spread, with plenty of support for the use of bitcoins. Bank of America has released some research stating that the virtual currency has the potential to be a "major means of payment for e-commerce" in the future, with an estimated value of $1,300 per bitcoin.