Monday, December 16, 2013

Bitcoin could Become the Major E-Currency





This is more commentary on the world of bitcoin.  What interests me is that a bank analyst has begun to cover it.  It remains experimental but somehow or the other it is emerging as a potential secure money transfer system that is cheap and clearly outside any national control.  It has huge potential to emerge as a global reserve currency that the presence default system of the USA dollar provides. 

This also preempts Chinese attempts to enter the same market.

I think that the conditions laid down here will be easily met.  In the meantime everyone is exploring the problem of money.

Bitcoin could become the major currency for ecommerce transactions according to Bank of America
DECEMBER 05, 2013


Bitcoin has "clear potential for growth" and could become a major means of payment for online transactions and money transfers, a Bank of America analyst told CNBC on Thursday.

The digital currency could hit a market capitalization of $15 billion on its way to becoming similar to a store-of-value commodity like silver, David Woo said in a CNBC interview. 

On Thursday, the People's Bank of China outlawed the country's banks from using it, leading some to cash in on their investments. 
Bitcoin value went down 20% as a result.

David Woo, head of global rates and currencies research, valued an individual bitcoin at $1,300 at his maximum market capitalization. According to bitcoin exchange Mt.Gox.com, prices were above $1,000 Thursday afternoon.

Woo said the estimated market capitalization was an "upper limit" on his bitcoin forecast, and would only happen if the digital currency crosses three thresholds: 

1) It becomes 10 percent of business-to-consumer online transactions
2) one of the top three means of money transfers
3) a commodity similar to silver.



"There's no question that bitcoin has some inherent risk," Woo said. "But I think we also need to recognize the fact that bitcoin does have a role to play in countries where its citizens face high taxes, capital controls or even high confiscation risk. This is why China has seen massive growing demand for bitcoins."

Woo played down fears that bitcoin could fuel an underground economy of illicit drugs and untraceable transactions. Bitcoins, which are complex lines of code, contains a built-in code that produces a digital—and public—footprint, he said.

"From that point of view, I don't think bitcoin could become a big story in the criminal underworld," Woo said. 


BofA: Bitcoin can become 'major means of payment' for e-commerce
 Published: Thursday, 5 Dec 2013 | 1:12 PM ET
By: Jeff Morganteen | Producer, CNBC.com




Is Bitcoin already in http://www.cnbc.com/id/101250070  a bubble?
Thursday, 5 Dec 2013 | 11:01 AM ET

David Woo, Bank of America, discusses his Bitcoin cost-benefit analysis and the advantages of the virtual currency. Woo also comments on the China ban.

Bitcoin has "clear potential for growth" and could become a major means of payment for online transactions and money transfers, a Bank of America analyst told CNBC on Thursday.

The digital currency could hit a market capitalization of $15 billion on its way to becoming similar to a store-of-value commodity like silver, David Woo said in a CNBC interview.

Woo, head of global rates and currencies research, spoke on CNBC's "Squawk on the Street" after writing BofA's first assessment of bitcoin. His note is a reflection of the attention the fledgling currency has received from investors—and government regulators. On Thursday, the People's Bank of China outlawed the country's banks from using it, leading some to cash in on their investments.

"At the end of the day, we've never seen anything like this before," Woo said of the growth of bitcoin. "You have to look at this from outside the box to get some kind of fair value notion. We think the market is very much in need of value assessment because otherwise you don't know how far this thing could go."

Woo valued an individual bitcoin at $1,300 at his maximum market capitalization. According to bitcoin exchange Mt.Gox.com, prices were above $1,000 Thursday afternoon.
Woo said the estimated market capitalization was an "upper limit" on his bitcoin forecast, and would only happen if the digital currency crosses three thresholds: It becomes 10 percent of business-to-consumer online transactions, one of the top three means of money transfers and a commodity similar to silver.

Despite Beijing's move, Woo said bitcoin has immense growth potential in countries with strict regulations such as China.

"There's no question that bitcoin has some inherent risk," Woo said. "But I think we also need to recognize the fact that bitcoin does have a role to play in countries where its citizens face high taxes, capital controls or even high confiscation risk. This is why China has seen massive growing demand for bitcoins."

Woo played down fears that bitcoin could fuel an underground economy of illicit drugs and untraceable transactions. Bitcoins, which are complex lines of code, contains a built-in code that produces a digital—and public—footprint, he said.

"From that point of view, I don't think bitcoin could become a big story in the criminal underworld," Woo said.


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