You likely haven’t failed to notice that Bitcoin has been hugely volatile of late, with the result that Lloyds Banking Group has now banned customers from purchasing the cryptocurrency on credit cards.
It seems that Bitcoin’s meteoric rise throughout December – during which it climbed to around $19,500 (around £13,800, AU$24,500) in the middle of the month, a near fivefold increase in under three months at the tail end of last year – might be prompting plenty of people to buy the virtual coins with money they don’t have. In other words, using their credit cards to jump on the Bitcoin bandwagon.
Following Bitcoin’s massive slide last month, and subsequent major volatility – it’s currently just under the $8,000 (around £5,700, AU$10,000) mark at the time of writing – Lloyds fears that folks won’t be able to pay back their debts if the cryptocurrency continues to fall in value.
As the Guardian reports, a spokeswoman for the Lloyds Banking Group commented: “Across Lloyds Bank, Bank of Scotland, Halifax and MBNA, we do not accept credit card transactions involving the purchase of cryptocurrencies.”
The digital coinage could still have a long way to drop, potentially. Particularly with signals like this being given off by major financial institutions.
Over in the US, major banks are making similar moves. As Bloomberg observed, over the weekend, JPMorgan, Bank of America and Citigroup blocked the purchase of Bitcoin (and other cryptocurrencies) via credit cards, simply because of the risk involved.
The initial major fall in Bitcoin last month was triggered by rumors that South Korea could ban trading the cryptocurrency entirely, although the government later clarified that this wouldn’t happen – at least not in the near term. There are also whispers that China is looking towards a total ban on the virtual currency.
It’s not just governments and banks who are worried, either, with Facebook also instigating a blanket ban on adverts for any cryptocurrency. That happened because the social network is worried about scam ads for cryptocurrencies tricking people into parting with their (real) money.
As we’ve mentioned, Bitcoin is a volatile enough arena as it is, and all this extra pressure as a reaction to its inflated-looking value is likely to take its toll on confidence in the cryptocurrency.
That said, there are doubtless plenty of folks out there who witnessed December’s huge rally, and are willing to punt that it might happen again. Or perhaps look at alternative or more minor players in the virtual currency world, in the belief that they may follow in Bitcoin’s blazing wake.