Members of the tech media are peering into a new study published by the Congressional Research Service earlier this month
Titled “The Potential Decline of Cash Usage and Related Implications,” the study considers the use of Bitcoin and other forms of payment in economic communities and ecosystems.
“(The study) appears to forecast a reduction in paper money as contactless card payments increase,” writes William Suberg this morning at Cointelegraph, providing this excerpt:
“Although price data on Bitcoin illustrates the public interest in and overall demand for this cryptocurrency, it is a poor indicator of how often it is being exchanged for goods and services… Certain analyses appear to show that digital currencies are not being widely used and accepted as payment for goods and services, but rather as investment vehicles.”
As Suberg reports, this study refutes others that suggest Bitcoin will become a significant tool for consumer transactions.
“Analysis from software company DataLight last month painted an entirely different picture, claiming bitcoin was already poised to usurp both cash and card payments worldwide,” Suberg writes. “All that is needed, its authors wrote, is for bitcoin’s development to continue in its current vein.”
The idea that Bitcoin is mainly used as a financial holding and not for transactional purchases makes sense given findings by Diar showing that during Bitcoin’s significant dip in months past, large buyers were quietly hoovering up major sums of Bitcoin in electronic wallets.
All of this leads some economists to prophesy a major bubble and point out other risks and shortcomings of blockchain-based cryptocurrencies.
“Jens Weidmann, BBk president and chairman of the board of the Bank for International Settlements, reportedly claimed that the adoption of digital money could potentially destabilize the financial system during periods of crisis,” writes Helen Partz, covering doubts on the part of Weidmann and other German officials. “The German economist explained that easy access to digital currencies could accelerate a collapse of lenders, while it would ‘fundamentally change the business model of banks’ even in a good economic environment .”
However, those arguing for market freedoms suggest that the use of cryptocurrencies in financial markets must be allowed to play out, calling for more universal rules and better regulatory structures around assets like Bitcoin.
The U.S. SEC is trying its best to find some way forward towards a comprehensive crypto framework – and we’ll keep bringing you updates on these types of efforts, including the long saga related to approving a Bitcoin ETF for the market.