Virtual currencies

A virtual currency is a digital unit of currency that is primarily used for Internet-based payments. The virtual currencies are not issued by central banks; they are normally issued and controlled by their developer. This could be a company or other private organisation.

Issuing virtual currencies is not subject to regulation and the issuers are not under financial supervision.

Virtual currency schemes

  • Closed virtual currency schemes. The currency is limited in use to, for instance, a particular on-line game and cannot be used in other contexts or converted into another currency. World of Warcraft Gold is one example of this type of scheme.
  • Virtual currency schemes with unidirectional flow are schemes where the virtual currency is bought for real money but cannot be converted back. One example is Amazon Coins, which Kindle users can exchange real money for and then use to buy applications.
  • Virtual currency schemes with bidirectional flow. In these schemes, one can use money to buy the virtual currency and also convert it back into money at special exchange websites and/or the issuer. Bitcoin is one example of a virtual currency scheme with a bidirectional flow.

Bitcoin – the most commonly-used virtual currency

Bitcoin was launched in 2009 and is the most commonly-used virtual currency. It is used for payments between individuals via the Internet and in some webshops. The currency does not have an individual issuer, but is created by its user network. The newly-created Bitcoins act as a reward for the users who pool their hardware resources to verify the payments made.


The idea is that the users can anonymously make on-line payments independent of governments, banks and other institutions.

Why is the Riksbank monitoring the development of virtual currencies

Virtual currencies are an example of the innovations that have impacted the retail payments market in recent years. The Riksbank monitors and analyses the payment system and the retail payment market as part of our task of promoting a safe and efficient payment mechanism. Retail payments are payments of relatively small amounts that are made in large numbers, primarily between households, companies and authorities.

Limited use of virtual currencies 

So far, all available data indicate that the use of virtual currencies is very limited, in terms of the number of users, the number of transactions and also the value mediated. On average, around 212 Bitcoins per day were converted to or from SEK during the period December 2012 to May 2014. As a comparison, Swedish households make a daily total of 8 million payments using cash and cards.


This limited use means that any positive effects are very minor, as are the possible negative effects on financial stability and the safety of the payment mechanism.


Read more about virtual currencies and Bitcoin in Economic commentary: Have virtual currencies affected the market for payments? (PDF)

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