September 26, 2018 17:50

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Management of digital money: Avoiding of deformation

13:15 | 02/01/2018

VCN- In 2017, the world will see a new "fever" called Bitcoin and other kinds of digital money. With hundreds of ups and downs, tens of thousands of dollars can be devalued in a few hours; Bitcoin's "madness" not only hurts investors, speculators, but the managers in many countries in the world.

management of digital money avoiding of deformation
"Crazy" Bitcoin has not stopped yet. Source: Internet.

Big fever

According to Wikipedia, Bitcoin (pronounced "BTC") is a decentralized digital currency that was invented in 2009. Bitcoin has a different approach than typical currencies: none of the central banks manage it and the system operates on a network protocol on the Internet.

Despite such history, Bitcoin only really stirred the world from the beginning of 2017 to now, and continuously increases its price hippopotamus tag. At its inception, 1,300 Bitcoin could be exchanged for 1 USD, but by March 2017, Bitcoin had exceeded 1,000 USD. Then, the "madness" of digital money has pushed the value up to more than 20,000 USD/Bitcoin, meaning that in just one year, the price of Bitcoin has increased more than 20 times, and many speculators quickly become a millionaire

Most countries in the world do not accept this currency, but in 2017, many places have legitimized this currency, giving Bitcoin the momentum for the price increase. Typically, Japan has recognized Bitcoin as a formal payment method; Australia abolished the levy on Bitcoin. The two major trading platforms in the US are CME and CBOE are allowed to conduct futures contracts of Bitcoin etc.

In Vietnam, from 2014 up to now, the State Bank has repeatedly issued recommendations on the use of Bitcoin. Accordingly, Bitcoin and other similar digital money are not currency and are not legal means of payment in Vietnam. However, before the impact and huge profits that digital money brings, the operation of digital money in Vietnam is still carried out by some individuals and organizations such as the establishment of trading platform Bitcoin online, installation of electronic money transaction machine etc. So, from early 2017 to mid December, the country imported 2,470 Bitcoin excavators and Litecoin (data processing machine automatically exploit virtual money on the network), all originating in China. At a recent seminar, a Fintech expert revealed, many Vietnamese have imported virtual cash dispensers, set up digging virtual money "farms" in Laos, Cambodia etc., to avoid control.

Find out how to control

According to Lawyer Truong Thanh Duc, Chairman of the BASICO Law Firm, the current law stipulates that assets include property, money, valuable papers and property rights. Bitcoin is a property right, so it's not money. As such, the use of Bitcoin for payment will be prohibited.

In addition, the experts also said that the sale, exchange, "dig" digital money are used for real resources, real money, so if no timely management measures are in place, the state may lose revenue from taxes, with banks finding it difficult to control the amount of money. Recently, in August, the Prime Minister approved the project to improve the legal framework for managing and dealing with virtual assets, electronic money and virtual money. Accordingly, the Prime Minister assigned the Ministry of Justice to take a leading role in reviewing the current state of law, the practice of virtual currency, virtual property, and electronic money; to assign the State Bank to revise, study, propose the amendment, supplementation and promulgation of legal documents on electronic money; To assign the Ministry of Finance to assume the prime responsibility for studying and proposing the amendments, supplements and promulgation of legal documents on tax on virtual assets; The Ministry of Public Security shall assume the prime responsibility for studying and proposing measures to prevent and combat, and handle, criminal violations related to virtual property and virtual money.

These tasks have a deadline of mid-2018, to 2019, so up to now, digital money players in Vietnam are facing many risks. On the one hand, concerns over the risk of digital "bubble" may break at any time as many digital money forecasts suggest a sharp fall next year. On the other hand, investors in Vietnam will not be protected if the money collapses due to no legal regulations. So, Mr. Truong Thanh Duc said that Bitcoin is a manifestation of technology but also produces the need to be cautious when investing; if the risks occur in the future, the investor should not blame the State, experts do not warn.

In addition, the current reality shows that if the laws are not quickly studied and implemented, there will be many variations on this kind of money occurring. Recently, the media talked about many phenomena, business affairs, and for buying and selling digital money in the shadow of multi-level platforms to cheat ignorant people to believe. The offender will fake the name of a digital currency, call on, and engage the participants with the commitment to more and more participation at higher interest rates, to make them think they will get rich quickly. But until the goal is achieved, this platform will "collapse", or be a gamble to take the player's money, etc. In addition, the Internet community is at risk of malicious code, viruses and so on, as a hacker’s purpose is digging virtual money.

As can be seen, management and control is needed, more urgently than ever. Finance and banking expert, Dr. Nguyen Van Luc, commented that digital money has benefits but also risks, so countries have different approaches, Vietnam is approaching relatively competent in the matter, but the government should speed up the study of virtual assets, including digital money, so that Vietnam has a full legal framework but can still follow the trend of the times.

By Hương Dịu/ Huu Tuc