The dong's depreciation is aiding the development of an underground system for bitcoin as "people are looking for a secure storage of wealth", he says. The State Bank of Vietnam's February warning on its website that the use of bitcoin "is not lawfully approved and protected" did not stop companies from creating a global exchange for brokers in March. A second bourse that caters to users within Vietnam started this month. The monetary authority said it did not recognise bitcoin and has banned banks from using virtual currencies. The central bank "has been warning organisations and individuals to not hold, invest or execute any transactions involving bitcoin or any other similar virtual currencies because possession, trading and utilisation of bitcoin and similar virtual currencies as assets pose risks and are not lawfully recognised nor protected", the monetary authority said in an emailed statement in response to Bloomberg questions. In December, China's central bank banned financial institutions from transactions in bitcoin and Thailand's foreign exchange rules bar its conversion into other currencies. The Monetary Authority of Singapore has said it plans to issue regulations requiring facilitators of virtual currency exchanges to verify identities of customers and report suspicious transactions to the police. Bitcoin is the latest threat to the dong in Vietnam, where dollars and gold are often given as wedding gifts and are preferred as payment for large transactions such as house purchases.

In 2011, the government began taking steps to reduce the dollarisation of its economy. The central bank directed lenders to cut interest rates on dollar deposits and sought to curb a black market for the greenback. While some Vietnamese landlords still demand rent for high-end apartments in dollars, goods and services are prohibited from being priced in US currency. The government has had to deal with runs on banks and credit co-operatives that collapsed and is "very suspicious" of new financial instruments that could threaten macroeconomic stability, according to Fred Burke, managing director of Baker & McKenzie (Vietnam) Ltd in Ho Chi Minh City. "With something like virtual currencies, there can be an even bigger feeling of loss of control," Burke says. "It undermines the power of the state." The global exchange run by Bitcoin Vietnam Co. had the number of users rise to more than 1800 since it started in March, with about 150 bitcoin trades valued at about $86,200, according to Weil. The domestic exchange operated by VBTC has about 300 users with two bitcoins traded so far, he said, adding that both companies are owned by the same startup. The bourses in Ho Chi Minh City, run out of a home along a narrow alley where neighbours raise chickens and sell vegetables, have been scrutinised by local authorities and the police, though their operations have not been hindered, Weil says.

Referring to the government, Weil says: "They are sending out messages that 'we don't like it'. "They didn't ban it. Some people hope this bitcoin thing will go away." The government's anti-bitcoin campaign is, however, discouraging some businesses. A Hanoi cafe that accepted bitcoin until April no longer accepts digital money, its co-owner, Quang Hung, says. Vietnam lacks regulations on the use of bitcoin and other virtual currencies, the Thoi Bao Ngan Hang newspaper reported last month, citing an interview with Major General Nguyen Hung Linh, the head of investment, currency and finance security at the Ministry of Public Security. The government will need a transition period to formulate solutions and responses to digital money, the report quoted him as saying. Officials at the department did not respond to requests for comment via phone and a hand-delivered letter.

The central bank devalued the dong for the first time in a year on June 19, weakening the reference rate by 1 per cent. Australia & New Zealand Banking Group Ltd expects the authority to further weaken the currency by the end of the year, economics analyst Eugenia Fabon Victorino wrote in a June 19 note. The dong has slipped 0.6 per cent this year to 21,230 per dollar, while currencies of Indonesia, Malaysia, Thailand, the Philippines and Singapore have strengthened, data compiled by Bloomberg shows. Bitcoin has surged from $13.28 at the start of 2013 to $561 as of Thursday morning. The virtual currency reached a high of $1147 in December and plunged in the first quarter of this year after the collapse of Mt. Gox, once the world's largest bitcoin exchange. Dwindling faith in the dong along with the growing popularity of smartphones and electronic commerce will help bitcoin gain acceptance in Vietnam, according to Kien, the founder of the parenting website. He has received one payment of 0.03 bitcoin so far. "Bitcoin could play a big role in Vietnam," says Le Thao, the founder of a startup in Hanoi to create software for virtual currency touchscreen kiosks. "It's unstoppable in the world. So Vietnam has no choice but to accept it."

– with Nguyen Dieu Tu Uyen in Hanoi.