Moreover, the Central Bank has said that it does not recognise or regulate Bitcoin. The warning came after Irelands first Bitcoin ATM became operational in Dublin.
The machine, which converts physical EUR cash into the digital currency, is being operated by Bitvendo, a Bitcoin vending business started by a number of Irish and international digital currency enthusiasts. Bitcoin is a virtual digital currency that is not backed by real assets and has no central authorities governing it.
Each Bitcoin is introduced to the system over time rather than instantly and is surrounded by a complex mathematical formula that can only be unlocked by experts using high powered computers under a process known as mining. The slow release guards against inflation, and a finite number of 21 million Bitcoins will have been released by 2140.
In order to use the desktop device, which is located in mobile phone accessory shop GSM Solutions on Upper Abbey Street, users must first download and set up a digital wallet in which to store their Bitcoins. The user then scans a digital QR code, generated by their digital wallet, at the vending machine and enters the amount of EUR cash they wish to convert into Bitcoins.
The conversion takes place at an exchange rate dictated by a selection of different Bitcoin exchanges, which is updated in real time, and the digital currency is then lodged into the users digital wallet. Bitvendo charges 3%-5% commission on each transaction. The company plans to roll out more Bitcoin ATMs around the country over the coming months, beginning in Waterford.
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