MONTREAL, Jan. 15, 2014 /CNW Telbec/ - Bitcoin digital currency is
attracting increasing attention from Internet users, retailers,
researchers, central banks, and of course, speculators. Since its
launch in 2009, the value of a bitcoin has fluctuated considerably,
reaching a peak of over a thousand US dollars in the fall of 2013
before dropping back down in the month of December. Is Bitcoin here to
stay and become an integral part of our economic lives? The Montreal
Economic Institute presents some of the answers in a new Economic Note published today.
Bitcoin is both a payment system and an electronic currency that is now
accepted by a growing number of retailers and businesses of all kinds.
In Canada, the first Bitcoin ATM has seen the light of day in
Vancouver, and a second was installed in Toronto this week.
The enthusiasm for cryptocurrencies is growing. In addition to allowing
people to save on transaction fees, it has some very promising features
for banks and the financial sector in general. "The Bitcoin
infrastructure could serve as a technological platform for many banking
products and services, thereby allowing financial institutions to
improve their service offerings," explains David Descôteaux, the
Bitcoin could be developed further, but it still suffers from some major
shortcomings that are holding it back commercially speaking. So far, it
is difficult—even impossible—to have any legal recourse in cases of
fraud. Once confirmed, transactions are irreversible. The volatility of
the value of bitcoins also entails costs and risks. This volatility
will tend to decrease with the expanding use of bitcoins as a medium of
exchange, which will reduce the influence of speculators.
However, the biggest obstacle remains the fact that Bitcoin operates in
a grey zone. The reserves expressed about it by several central banks,
like those of China and France, have not boosted its credibility.
"While it represents a fascinating innovation with a good potential for
success, an appropriate legal and regulatory framework will need to be
adopted. Its wide-scale use depends on the reinforcement of investor
confidence in order to mitigate remaining risks and concerns,"
concludes Michel Kelly-Gagnon, President and CEO of the Montreal
The Economic Note entitled "Bitcoin: More Than a Currency, a Potential for Innovation"
was prepared by David Descôteaux, associate researcher with the
Montreal Economic Institute. This publication is available on our website.
* * *
The Montreal Economic Institute is an independent, non-partisan,
not-for-profit research and educational organization. Through its
studies and its conferences, the MEI stimulates debate on public
policies in Quebec and across Canada by proposing wealth-creating
reforms based on market mechanisms.
SOURCE: Montreal Economic Institute
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