UBS: Bitcoin Isn’t Ready To Be A Currency
Bitcoin was invented and has been always seen as an alternative to the fiat currency. Bitcoin evangelists are commonly seen as talking about the flaws of the financial system as well as how Bitcoin can replace it.
As reported by Bloomberg on 2nd August, Union Bank of Switzerland, the second-largest bank in the world, said that the price of Bitcoin needs to hit $2,13,000 or the network processing capabilities have to be improved in order to be considered as a potential replacement to fiat.
It further mentioned that Bitcoin cannot be even considered as a viable asset class, let alone act as money.
In the 3-4 page report, UBS mentioned,
“Our findings suggest that Bitcoin, in its current form, is too unstable and limited to become a viable means of payment for global transactions or a mainstream asset class,”
Bitcoin’s capacity to process transactions is only a fraction of what Visa and Mastercard can do. The speed of Bitcoin transactions is around 3-7 TPS (Transactions Per Second), whereas that of Visa is well above 65000 TPS. More importantly, the rising fee of the network makes the use of Bitcoin as a currency more disadvantageous than fruitful.
According to a report by Chainalysis Inc, the amount of money received by the largest 17 crypto merchant-processing services has fallen from $411 million in September to $60 million in May.
70% of all the price action in Bitcoin is due to speculative investments, including the $20,000 bull run last December.
Tonkin, chief growth officer at Mosaic, a crypto finance research company said,
“I assume many people are like me, where you won’t be doing your everyday transactions in it. I don’t believe [it] fits the characteristics of money very well.”
Considering the given facts, it is unlikely that you’ll be paying for your Starbucks coffee with Bitcoin due to the rising transaction fees which makes microtransactions almost impossible. The ‘moneyness’ of Bitcoin is mostly because of its use to process cross-border payments which prove to be cheaper than the traditional financial system.
Even though the volatility has decreased, Bitcoin’s future in the e-commerce industry is foggy.