Bitcoin should not be seen as a currency, warns Ernst & Young

moneybitcoin11 Dec 2013 / The Guardian – Bitcoin does not need to replace normal currency in order to have a future, according to an expert on digital currencies from professional services firm Ernst & Young.

Speaking at an event in London, Roger Willis, who has been following bitcoin since its inception in 2009, described myths around the currency, one of which was its position as a replacement for “fiat” money.

“Fiat currency is essentially currency the government decrees to be legal tender,” Willis says. “Bitcoin wasn’t really developed to be a replacement for fiat currency. You see a lot of people talking about how bitcoin is going to take over, or how bitcoin doesn’t have the properties that lend to it being used widely.

“But it was really developed to be used in ecommerce and for micro transactions. It wasn’t really to replace our sterling, our us dollars, and our euros.”

With that in mind, the future risks for the currency take on a different shape. Currently, many critics are concerned with problems like price volatility and the deflationary nature of bitcoin. There will only ever be 21m bitcoins, and that has led some to fear that the currency will have a “deflationary” element in the future, leading to each unit getting comparatively more valuable over time…… Read more

http://www.theguardian.com/technology/2013/dec/11/ernst-young-warn-bitcoin-payment-problems

 

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