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Bitcoin Isn't An Everyday Payment Method And Won’t Be Anytime Soon - RBA Governor

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Bitcoin Isn’t An Everyday Payment Method And Won’t Be Anytime Soon — RBA Governor

(Kitco News) - It is hard to see cryptocurrencies like bitcoin being used for daily transactions on a global scale, said the head of Australia’s central bank, adding that the fascination around digital currencies is a “speculative mania.”

“The current fascination with these currencies feels more like a speculative mania than it has to do with their use as an efficient and convenient form of electronic payment,” Reserve Bank of Australia (RBA) governor Philip Lowe said in a speech titled ‘An eAUD?’

Bitcoin is not being used for everyday payments and it is unlikely to be accepted as such anytime soon, the RBA governor pointed out.

“In reality, these currencies are not being commonly used for everyday payments and, as things currently stand, it is hard to see that changing,” Lowe said on Wednesday.

The reasons for this are bitcoin’s high volatility, limited number of payments that can be handled at the same time, high transaction and electricity costs, and governance issues, Lowe stated.

Plus, when bitcoin is viewed solely as a payment instrument, it seems “more likely to be attractive to those who want to make transactions in the black or illegal economy, rather than everyday transactions.”

Lowe’s statement about the cryptocurrency comes only two days after the launch of the first bitcoin futures on Chicago-based derivatives exchange CBOE Global Markets.

Since the launch, bitcoin saw significant gains, reaching a new all-time high above $17,000 on Tuesday and last at $17,138, up 0.98% on the day. 

Lowe’s speech was largely dedicated to discussing the future of payment systems in Australia, including the possibility of introducing a digital form of the Australian dollar named an eAUD.

The RBA remains open-minded about the idea, Lowe said, but added that nothing specific has been agreed upon yet.

“The case for adding an electronic form of Australian banknotes to the payments mix has not been established, even if it were technologically feasible. My working hypothesis here is that the NPP [New Payments Platform] will serve this purpose. The RBA is in close contact with our peers in other countries on this issue and few see electronic banknotes on the horizon,” he noted.

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