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Vienna gets its first Bitcoin digital currency 'bank'

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Vienna gets its first Bitcoin digital currency 'bank'
Photo: ORF
11:07 CET+01:00
The Austrian capital Vienna has its first 'Bitcoin bank', located on the popular Mariahilfer Strasse shopping street. Customers can exchange cash for Bitcoin, and find out information about the digital currency.

In January Bitcoin saw its value top $1,000 (€940) for the first time in three years after it ended as the best-performing currency of 2016. However, on February 9th its value fell dramatically, although it recovered quickly.

Analysts attributed the January high to increased demand from China, which is where most Bitcoin trading takes place.

Bitcoin relies on web-based transactions handled across thousands of computers and is used as an anonymous way to move money globally. Magdalena Isbrandt, managing director of Bit Trust says the advantages of the digital currency are that transactions "are simply much faster and can be done without a middleman.”

There are no fees or bank involvement but the secrecy surrounding the currency have led some to question its stability and transparency. The value of Bitcoin has been volatile since it was first launched in 2009. Like all currencies, its value is determined by how much people are willing to exchange it for.

To receive a Bitcoin, a user must have a Bitcoin address - a string of 27-34 letters and numbers - which acts as a kind of virtual post box to and from which the Bitcoins are sent.

Since there is no register of these addresses, people can use them to protect their anonymity when making a transaction.

Andreas Petersson of Bitcoin Austria says this is an advantage: "If I pay online with Bitcoin, I have a certain level of privacy. The vendor does not have my credit card number. If I pay for purely digital goods, like computer games, I have a much better feeling as I’m not handing over all my private data."

However, for Gabriele Zgubic of the Vienna Chamber of Labour, the currency holds too many risks. “It is subject to strong fluctuations, which could mean you end up losing money. There’s also the security risk, as it’s very attractive to hackers, and you have to be aware of the security on your smartphone. As it’s an unregulated currency, if you do get hacked, there’s no one you can claim compensation from.”

Last year, Switzerland's national rail service (SBB) launched a new service selling Bitcoin at all ticket machines across the country.

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