The Evolution of Virtual Currencies: Analyzing the Case of Bitcoin - Information and Communication Technologies in Public Administration - page 219

However, even bitcoin evangelists concede that for bitcoin to replace the dollar,
three conditions need to exist, some of which undermine the underlying reason why
users gravitated to it in the first place. For one, the existing infrastructure, which
is largely anonymous, anchored by unregulated overseas exchanges, and vulnerable
to manipulation by criminals, must be overhauled through the creation of U.S.
exchanges overseen by financial watchdogs, the same watchdogs that undermine
the freedom from regulation that bitcoinistas boasted about. Second, institutional
money like pension funds will have to be invested in bitcoin to curb its wild price
volatility. Third, banks will have to view bitcoin as a legitimate mode of transaction
and enable customers to exchange it for dollars and cents. None of these are a real-
ity for today's bitcoin, which makes it a long way from serving as a replacement for
the dollar. There is a real possibility though that bitcoin will play more than a bit
part in the financial industry of the future (Guerrera, 2014).
In fact, when David Woo of the Bank of America, Head of Global Rates and
Currencies Research, came out with an assessment of bitcoin in November 2013, it
became tantamount to an endorsement of bitcoin as a major means of payment for
e-commerce transactions. Woo even identified the three things that needed to hap-
pen for bitcoin to be worth what it currently is. He said that to justify the current
value of bitcoin, it will need to (1) account for at least 10% of all global e-commerce
business to consumer transactions, (2) become one of the top three players in the
money transfer industry, and (3) acquire a store of value reputation close to silver
(Bank of America, 2013).
10.3.1 Bitcoin Uses—Positive and Negative Impacts
Bitcoin has had its impact in the economic and political realm during the 5 years
that it has been in existence. It can be used in buying video games, gifts, books, and
others. Table 10.2 lists some of the items that can be paid for using bitcoins. For
smaller businesses and freelancers, the willingness to accept bitcoin is an effective
way to get noticed.
In its website, the Bitcoin Foundation provides users with various reasons for
the positive impact of bitcoins in society in much the same way that it elaborates on
the negative impact of bitcoins.
Positive Effects
Payment freedom : It is possible to send and receive any amount of money instantly
anywhere in the world at any time.
Very low fees : Bitcoin payments are currently processed with either no fees or
extremely small fees.
Fewer risks for merchants : Bitcoin transactions are secure and irreversible and do
not contain customers' sensitive or personal information.