The latest US Federal Reserve of St. Louis report along with the previous ones share a great deal of Bitcoin potential: Cool features of Bitcoin, Bitcoin has no intrinsic value, but so does the U.S. dollar & others, Bitcoin to assume similar role as gold, Bitcoin’s POW mining expensive, so is centralized payments systems and its evolution into a valuable portfolio diversification instrument.
Bitcoin is cool
The Federal Reserve Bank of St. Louis is one of the 12 regional Reserve Banks of the US that make up the country’s central bank. Unlike other banks, it has been pretty positive about cryptocurrencies as it repeatedly shares its report on Bitcoin.
In one of its latest report that has been published last month, Charles Kahn in his post “Payment Systems and Privacy” shared:
“There is a legitimate market for privacy of transactions. Bitcoin is in this market. The providers of stored value cards are in this market. To a certain extent, PayPal is in this market, as are the credit card companies with their tokenization programs for internet transactions. And government-provided currency is also in this market.
One of the cool features of Bitcoin is its ability to permit transactions across the internet while maintaining privacy from the Bitcoin system.”
Decentralized cryptos are a welcome addition to the existing currency system
In a previous report shared by the Federal Bank in the first quarter of 2018 titled “A Short Introduction to the World of Cryptocurrencies” by Aleksander Berentsen and Fabian Schär:
“Bitcoin units have no intrinsic value…. The price of Bitcoin, therefore, reacts highly elastically to changes in the expectations of market participants and is reflected in extreme price volatility.
However, Bitcoin is not the only currency that has no intrinsic value. State monopoly currencies, such as the U.S. dollar, the euro, and the Swiss franc, have no intrinsic value either. They are fiat currencies created by government decree. The history of state monopoly currencies is a history of wild price swings and failures. This is why decentralized cryptocurrencies are a welcome addition to the existing currency system.”
Also, read: Bitcoin Hashrate Going Insane with over 50% Jump, Experts say a New ATH Coming
Bitcoin: Similar role as gold
Discussing the potential of blockchain technology which “will become apparent only many years, or possibly decades, after it becomes generally adopted”, its most apparent application is Bitcoin as an asset:
“It is likely that crypto assets such as Bitcoin will emerge as their own asset class and thus have the potential to develop into an interesting investment and diversification instrument. Bitcoin itself could over time assume a similar role as gold.”
Bitcoin’s POW mining expensive so is centralized payments systems
As for energy wastage, “Proof-of-work mining is expensive, as it uses a great deal of energy” but:
“Centralized payment systems are also expensive. Besides infrastructure and operating costs, one would have to calculate the explicit and implicit costs of a central bank. ”
Bitcoin can evolve into a valuable portfolio diversification instrument
Though as a payment instrument it raises concerns, as an asset Bitcoin should not be neglected:
“…lead to the creation of a new asset class that can mature into a valuable portfolio diversification instrument.”
In its February publication, contemplating central bank cryptocurrencies, it shares:
“We believe there is great demand for a virtual asset issued by a trusted party that can be used to save outside of the private financial system.”
The post US Federal Reserve of St. Louis’ Bullish Views on Bitcoin: Cool Feature, Value & Becoming Gold appeared first on Coingape.
Written by Sagar Saxena @ https://coingape.com/us-federal-reserve-st-louis-bullish-on-bitcoin/ August 29, 2018 Sagar Saxena