As the chancellor embraces Bitcoin, could it soon be integral to commerce in the UK?
Charlotte Bowyer, digital policy researcher at the Adam Smith Institute, says Yes.
Given the right conditions, digital currencies could revolutionise payments processing and become an integral part of UK commerce.
Paying online with Bitcoin could become a serious alternative to using Visa or PayPal – if they don’t adopt the technology themselves.
The low fees charged for Bitcoin’s near-instantaneous transactions boost merchants’ margins, and make its use highly convenient.
This also invites significant disruption to the growing remittance market, where fees often top 10 per cent, and paves the way for “micropayments” for anything from road usage to consuming online media.
Success depends significantly on regulatory regimes; commercial adoption in the UK has been hindered by regulatory uncertainty.
Good regulation is clear, easily complied with and, most importantly, minimal. Overbearing and intrusive regimes would have disastrous consequences for this nascent technology.
Jonathan Rogers, a partner in the financial services regulatory group at Taylor Wessing, says No.
Bitcoin’s price volatility so far suggests that it is not being used as a true currency. Rather, it’s a hybrid between a volatile asset class and a unit of exchange for early adopters.
A new market? Why not. An integral part of our economy? Hang on.
Before we all do away with our piggy banks, let’s remember that a quantum leap is required in terms of product governance and a set of virtual currency rules to govern dealings between market participants.
Assurance is required on the terms of the product itself (currently an article of faith to the uninitiated), accountability, price stability, redemption and exchange, transaction verification, information inequality, user identification, settlement norms, and adverse event mitigation.
All of this in a currently borderless realm.
As the chancellor said yesterday, the government is only just starting a programme of work.