Feeds

Bank of America: Bitcoin could become THE currency of e-commerce

Guestimates that $1,300 is a reasonable price per coin

Maximizing your infrastructure through virtualization

Chinese banks may not be too keen on Bitcoin at the moment (which has done something to damp down the current price) but a new research report from Bank of America rates it as a major player in future internet transactions.

"We believe Bitcoin can become a major means of payment for e-commerce and may emerge as a serious competitor to traditional money transfer providers," the report states. "As a medium of exchange, Bitcoin has clear potential for growth, in our view."

Some suggest that the price of Bitcoin is going through a speculative bubble not based on reality, but the report's authors suggest that the currency may not yet have reached its true value. The Bank of America analysts think that the market value of a Bitcoin should be around $1,300, based on the assumption that around 10 per cent of e-commerce transactions will use the payment system.

Bitcoin has a number of advantages in the field, the report states. As a first-mover, or at least the first online currency to gain widespread acceptance, Bitcoin could push out any competitor currencies, and the authors note that while other virtual currencies have been tried, none have taken off.

Bitcoin's electronic nature makes it highly attractive for e-commerce, but the bank notes that the delay in transaction time may cause some vendors to steer clear of the currency. The report's authors also note that Bitcoin has a particular value as a crisis currency, and that the EU's Cyprus bailout coincided with a large increase in Bitcoin participants.

However, the report notes that the currency could suffer if governments around the world were to load it down with regulation, and its price volatility could make it unsuitable as a long-term storage medium for wealth. The security of Bitcoin could also be cracked, Bank of America suggests, rendering savings either worthless or worth a lot less.

The report notes that the public's interest in the currency, and its rapid price rise, has led to a 521 per cent growth in the number of Bitcoin miners. The amount of computational power required to mine a Bitcoin has now pushed hobbyists out of the market and specialized ASIC chips are required to perform the calculations needed to generate new currency. ®

The Power of One Infographic

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
Airbus promises Wi-Fi – yay – and 3D movies (meh) in new A330
If the person in front reclines their seat, this could get interesting
UK Parliament rubber-stamps EMERGENCY data grab 'n' keep bill
Just 49 MPs oppose Drip's rushed timetable
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
Samsung threatens to cut ties with supplier over child labour allegations
Vows to uphold 'zero tolerance' policy on underage workers
Dude, you're getting a Dell – with BITCOIN: IT giant slurps cryptocash
1. Buy PC with Bitcoin. 2. Mine more coins. 3. Goto step 1
ITC: Seagate and LSI can infringe Realtek patents because Realtek isn't in the US
Land of the (get off scot) free, when it's a foreign owner
prev story

Whitepapers

Reducing security risks from open source software
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Application security programs and practises
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Consolidation: the foundation for IT and business transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.