US issues a consumer how-to guide on Bitcoins

The US government has issued an advisory that warns about the risks that Bitcoins and other virtual currencies pose to consumers.

The six-page advisory published by the Consumer Financial Protection Bureau tells consumers what they should consider before deciding to use a virtual currency.

For example, it advises consumers to investigate the seller of virtual currencies before buying and to understand what their rights would be if the seller fails to deliver a purchase.

A virtual currency exchange operating in the United States is required to register with the US Financial Crimes Enforcement Network, which is part of the US Treasury Department, as a money services business, the advisory says.

But registration does not assure that an exchange is trustworthy. The agency warns about the danger of attacks by hackers, extreme fluctuations in values, fewer protections, scams and hidden costs.

Bitcoin has existed since 2009.

The currency is used primarily in internet commerce, but is seen by proponents as having potential to create new services in markets that have been hamstrung by weak currencies.