It started off so well... Bitcoin was one of the first implementations of the cryptocurrency concept. However, it triggered new problems as well. The currency was launched publicly in 2009 and managed to gain a great popularity over a short period of time. There was a time when the value of a bitcoin soared to $1,500 largely due to its unique offer – complete anonymity. However, it is particularly this feature that made bitcoins vulnerable. Financial regulators from all over the world became intent on limiting the use of the cryptocurrency closely watching how the situation was unfolding. Recently, the Bank of Russia joined the ranks of the opponents having issued a stern warning to businesses and individuals that financial transactions with bitcoins will be outlawed. “Virtual currencies are not secured and have no legally obliged entities. These operations carried out on so-called virtual exchanges are speculative in nature and carry a high risk in devaluation”, the representatives of the regulator said. Under Article 27 of the Federal Law On the Central Bank of the Russian Federation (Bank of Russia), monetary surrogates issued in the Russian Federation are prohibited. Similarly, the People's Bank of China barred bitcoins. In December 2013, it banned financial institutions from trading bitcoins. It said the currency does not threaten the financial stability of China; however, some risks persist. Anonymity and the possibility of exchanging attract attention of criminals and terrorist organizations around the world. Bitcoins are said to be used in payments for prohibited goods such as weapons and drugs as well as involved in money laundering schemes and financial fraud crimes. Thus, the FBI said that the turnover of Silk Road, an online black market, was estimated at over $1 billion. The users of the website used bitcoins to buy drugs and other illegal items.
