Research: Can Bitcoin succeed?

April 10, 2014

The mixed news and reviews of Bitcoin leave the public to wonder: Is Bitcoin on its last legs, or will it become a part of the mainstream payments infrastructure? What problems does this new currency solve compared with those that are already regulated and accepted worldwide?

A new Research Note from Mercator Advisory Group, "Bitcoin Basics, Trends, Regulations, and Usage," discusses definitions, principles, and history of this virtual currency, as well as diverging opinions on its merits and future. The note focuses both on Bitcoin's short-term challenges and on its long-term viability in the United States and other global markets.

"The main attraction of Bitcoin has always been that it is not an institution, an organization, or any sort of centralized entity," said Pradeep Moudgal, director of the emerging technologies advisory at Mercator Advisory Group and author of the note. "Since there is no central authority, it has thrived due to its transparent and hassle-free nature for both buyer and seller. While the governments of the United States, United Kingdom, or European Union are not likely to shut down Bitcoin, rules and regulations will likely be imposed as the digital currency's popularity continues to grow in select markets around the world."

Highlights of the research include:

  • features and principles underpinning Bitcoin (e.g., blockchain, mining, exchanges);
  • differences between fiat currencies and virtual currencies;
  • review of technologies that facilitate Bitcoin use including Bitcoin wallet, Bitcoin conversion ATMs, Google Glass, and Square;
  • regulatory trends and long-term viability in the U.S. and selected global markets; and
  • scenarios for Bitcoin's likely future fate as a payments instrument.

One of six exhibits in the 19-page report:

Bitcoin chart

Topics: Bitcoin , Payments

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