Bitcoin has the potential to revolutionize the financial sector said the Montreal Economic Institute (MEI) in its latest economic research report.
The institute, an independent, non-partisan and non-profit research organization, released a report about bitcoin Jan. 15 and has now become the latest organization to highlight the cryptocurrency’s prospects in what has become a rapidly expanding sector.
David Descôteaux, associate researcher at the MEI and author of the report, said in an interview with Kitco News, that bitcoin has the potential to completely change the financial service sector.
Descôteaux said bitcoin is already seen as a revolutionary payment transfer system and it is growing in popularity because of low transaction fees, a major issue especially in developing nations.
“The use of bitcoins therefore has the potential to improve the supply of financial services insofar as transaction fees remain low and confirmation delays for these transactions remain short,” he wrote in the MEI report.
Bitcoin gained a lot of attention in the last few months as its value skyrocketed; on Nov. 29, the price of a single bitcoin hit an all time high of $1,242. The price of bitcoin has come down significantly and is now trading around $817.
However, Descôteaux said that he is not very interested in the price of the e-currency but is more impressed with how the sector has grown in such a short time. He pointed out companies are created almost on a daily basis “to come up with new ways to facilitate the use of bitcoins.”
“This is the most interesting part of bitcoin,” he said. “I think the network is here to stay, in my opinion. Whole economies are now being created over the internet.”
Bitcoin has not just attracted the attention of retailers and organizations like MEI, but Descôteaux said major financial institutions are also looking at ways to incorporate cryptocurrencies in their services. The Sacramento Kings, the National Basketball Association franchise made headlines around the world Jan. 16 as it became the first professional sports team to accept bitcoin. Fans can now use the digital currency in the teams retail store in Sacramento, California.
Earlier, on Jan. 14, Wells Fargo WFC 0% also jumped onto the bitcoin bandwagon after it annoucing it assembled a group of financial executives, currency experts and U.S. government officials to discuss the virtual currency.
“If a big bank like Wells Fargo shows interest in bitcoin you know something is there,” said Descôteaux.
Descôteaux pointed out that the list of retailers and organizations that accept the e-currency grows on a daily basis and the debate is no longer whether or not it is an acceptable currency. He added the debate is now how will this sector grow.
“As long as you have trust in what you are using then you can call it a currency,” he said.
Although there is room for bitcoin to grow, Descôteaux said there are also important hurdles it has to overcome if wants to reach its full potential. The biggest obstacle the sector faces if it wants to become mainstream is that it has to be recognized by world governments, he added.
“It is kind of ironic, people thought it could be an alternative to the current monetary system but I think now if bitcoin wants to grow it will need government acceptance,” he said.
Although the list of companies now accepting bitcoin is growing, Descôteaux said there are still a lot who are afraid to jump into the market either because of a lack of regulations, little protection for consumers or for the simple fact that they don’t know what to do with the cryptocurrency.
Regulation is always an important topic when it comes to bitcoin and Descôteaux pointed out that he thinks it is only a matter of time before governments step in and address the issue.
“If the banks are starting to show interest in bitcoin I think that will force governments to act,” he said.