The online currency bitcoin has shown unexpected success, but its future as a broadly accepted exchange medium is limited, according to a report by a global banking group on Thursday.
The report by the International Institute of Finance, which represents more than 450 banks and financial institutions, said more regulation of bitcoin exchanges and transactions could strengthen its legitimacy among consumers and ease regulators’ doubts about it.
However, for the moment, bitcoin faces significant resistance in countries like China, the institute’s report said. And because most of the market is dominated by speculators rather than users, bitcoin’s value in other currencies is particularly volatile.
In a market worth about US$12 billion, the institute said, “It is estimated that 50 to upwards of 90 percent of bitcoin owners are speculators — thereby contributing to the substantial price fluctuations seen recently.”
It pointed to the sharp fall of bitcoin from a high of US$1,240 to US$576 in just three days last month after China banned its financial institutions from using the currency.
Since then bitcoin has rebounded, topping US$1,000 earlier this week before falling to US$915 on Thursday.
“If it persists, this remarkably high volatility will compromise bitcoin’s capacity to function as a medium of exchange, as it deters most large companies from accepting the digital currency as a form of payment,” the institute’s report said.
Unlike other currencies, bitcoin does not have the backing of a central bank or government. Instead, the units are generated by a complex computer algorithm designed by one or more anonymous people in 2009.
Because of that, the report said its functionality and ultimate success “is determined by programmers — and their goodwill is taken for granted.”
Thus the institute characterized bitcoin as effectively a “fiduciary currency” with no intrinsic value of its own and dependent on trust that it can be exchanged for a more common currency like the dollar.
That makes it “inherently fragile,” the institute said.
“Despite bitcoin’s ‘ingenious features’ it cannot provide a currency of stable value and its use as a broadly accepted medium of exchange appears limited,” the report said.
Meanwhile, the US Internal Revenue Service should give taxpayers clear rules on how it will handle transactions involving bitcoin and other digital currencies, National Taxpayer Advocate Nina Olson said on Thursday.
Olson, who runs an independent office within the IRS, listed digital currency as one of the 25 most serious issues encountered by US taxpayers.
Additional reporting by Bloomberg
The Eurovision Song Contest has seen a surge in punter interest at the bookmakers, becoming a major betting event, experts said ahead of last night’s giant glamfest in Basel. “Eurovision has quietly become one of the biggest betting events of the year,” said Tomi Huttunen, senior manager of the Online Computer Finland (OCS) betting and casino platform. Betting sites have long been used to gauge which way voters might be leaning ahead of the world’s biggest televised live music event. However, bookmakers highlight a huge increase in engagement in recent years — and this year in particular. “We’ve already passed 2023’s total activity and
Nvidia Corp CEO Jensen Huang (黃仁勳) today announced that his company has selected "Beitou Shilin" in Taipei for its new Taiwan office, called Nvidia Constellation, putting an end to months of speculation. Industry sources have said that the tech giant has been eyeing the Beitou Shilin Science Park as the site of its new overseas headquarters, and speculated that the new headquarters would be built on two plots of land designated as "T17" and "T18," which span 3.89 hectares in the park. "I think it's time for us to reveal one of the largest products we've ever built," Huang said near the
China yesterday announced anti-dumping duties as high as 74.9 percent on imports of polyoxymethylene (POM) copolymers, a type of engineering plastic, from Taiwan, the US, the EU and Japan. The Chinese Ministry of Commerce’s findings conclude a probe launched in May last year, shortly after the US sharply increased tariffs on Chinese electric vehicles, computer chips and other imports. POM copolymers can partially replace metals such as copper and zinc, and have various applications, including in auto parts, electronics and medical equipment, the Chinese ministry has said. In January, it said initial investigations had determined that dumping was taking place, and implemented preliminary
Intel Corp yesterday reinforced its determination to strengthen its partnerships with Taiwan’s ecosystem partners including original-electronic-manufacturing (OEM) companies such as Hon Hai Precision Industry Co (鴻海精密) and chipmaker United Microelectronics Corp (UMC, 聯電). “Tonight marks a new beginning. We renew our new partnership with Taiwan ecosystem,” Intel new chief executive officer Tan Lip-bu (陳立武) said at a dinner with representatives from the company’s local partners, celebrating the 40th anniversary of the US chip giant’s presence in Taiwan. Tan took the reins at Intel six weeks ago aiming to reform the chipmaker and revive its past glory. This is the first time Tan
RSS