Bitcoin Will Replace Money If It Climbs Above $200,000

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Bitcoin Will Replace Money If It Climbs Above $200,000
Investment bank UBS says bitcoin could become a mainstream form of payment. Photo Credit: ticinotoday

Swiss-based investment bank UBS has said that bitcoin could replace money and become the mainstream form of payment if it climbs above $200,000.

Bloomberg reports that a study published by UBS on Thursday, 2 August, points to the fact that bitcoin in its current form, is too unstable and limited to become a mainstream asset class or a viable means of payment for global transactions.

According to UBS, the absence of extensive regulatory provisions and a number of challenges including scalability, usability, volatility and high transaction fees meant that bitcoin could not exactly be classified as money as of yet.

“Fixed supply and unusual demand dynamics make the system susceptible to high price volatility, in turn making it difficult for bitcoin to step into the role of money or to be a viable new asset class,” the report said.

The extreme volatility of most digital assets like bitcoin remains a major concern for government authorities and institutional investors around the world. In a 7-month period between December 2017 and July 2018, bitcoin lost more than 60% of its value as its price plunged from an all-time high of $19,600 to less than $6,000. The market rallied briefly at the end of July, when its price shot past the $8,000 mark but the market has now entered August with another round of losses.

Nevertheless, bitcoin continues to generate massive interest from crypto enthusiasts and the financial establishment. Indeed, UBS said in a statement that it decided to commission the study to answer the increasing interest in cryptocurrency from its clients.

The authors of the UBS report also made sure to point out that bitcoin may go on to become “a viable payment mechanism and/or a legitimate asset class in which even the most conservative and traditional investors can participate.”

In July, a team of researchers from the Imperial College London, concluded bitcoin and other cryptocurrencies are close to becoming a mainstream form of payment following a study to measure how close cryptocurrency had come to fulfilling these roles.

The researchers were of the opinion that the rapidly evolving nature of cryptocurrencies, in addition to their decentralized nature and borderless design make them the next natural step towards reducing the friction of payments or asset transfer.