RBA Governor, Philip Lowe has taken Bitcoin fans to their toes with his latest remark on bitcoin as not less than a ‘speculative mania’, as it is not expected to become an attractive method of making everyday payments.
Speaking on banking technology at the Australian Payment Summit on Wednesday, Dr Lowe brought the reference to the cryptocurrency that is now trading above $US17,000, and said that adoption of Bitcoin for mainstream payments looks difficult given the high volatility in price coupled with challenges associated with governance/ regulation, high transaction costs, and high amount of electricity pumped in for mining of Bitcoin.
Lowe further stated that Bitcoin as a payment instrument seems more likely to be attractive to those who want to make transactions in the black or illegal economy, rather than everyday transactions. He further understated the current Bitcoin hype and labelled it as a fascination that is more like a speculative mania than it has to do with use as an efficient and convenient form of electronic payment. In responding to a question on buying a cup of coffee using Bitcoin, Lowe said that making a payment in Bitcoin would cost more than the coffee. With prices that move 20% up or down with each passing day, paying in the cryptocurrency might cost heavier.
Further, cost for many businesses of electronic payments is increasing and Lowe thus laid down a caution for the banking systems on their higher cost payment methods and such a scenario will help other forms of electronic payment to emerge.
While many asked RBA’s stance for a move to have a digital version of the Australian dollar to facilitate payments on private blockchains, the bank is yet to evaluate any convincing case considering operational and policy aspects. The bank thus highlighted of no immediate plans to issue an electronic form of Australian dollar banknotes while pros and cons are being evaluated.
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