Could Bitcoin reach the heights that its proponents have always claimed? The question about the world’s premier cryptocurrency reaching its $20,000 highs of last December is making a comeback with the potential Bitcoin ETF coming to town. However, financial giant UBS has presented a new report in which it suggests that Bitcoin will have to reach $213,000 in order to replace the US money supply.
What Does the Report Say?
Bitcoin enthusiasts suggest that the currency will one day replace the US money supply. UBS believes that another high around $20,000 will not be enough to achieve this dream. To replace all the paper bills, travelers’ checks and coins in US currency today, Bitcoin will have to reach $213,000. Not only this — the network’s processing speed will have to improve radically in order to process the payments currently made with the US dollar.
The new 34-page report by UBS suggests that Bitcoin’s current network can handle only a small fraction of the payments handled by card companies like Visa.
So What Is Bitcoin’s Problem Right Now?
Bitcoin is focusing more on its immediate valuation than its network capacity. As per UBS, the currency’s usefulness is currently limited because of the inherent design of the network that puts constraints on its capacity to handle transactions.
The report states:
“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.”
It also suggests that speculative demand is responsible for 70% of the change in Bitcoin prices. This will bring more speculative investors into the cryptocurrency markets as the prices will continue to be highly volatile. The report also claims that digital currencies have a potential to become an alternative asset class.
Commercial use of Bitcoin has also declined after reaching its peak in September, as suggested by a Chainalysis Inc. research report. Talking about the currency’s use as a tool to buy goods and services, senior researcher at International Computer Science Institute Nicholas Weaver said:
“It’s not actually usable. The net cost of a Bitcoin transaction is far more than a credit card transaction.”
Another issue with Bitcoin transactions is that they cannot be reversed and, because of this, merchants may feel unprotected against fraud.
UBS Says Bitcoin Has a Long Way To Go Before Becoming a Viable Asset Class was originally found on [blokt] – Blockchain, Bitcoin & Cryptocurrency News.