Last updated on June 20th, 2014 at 03:03 pm
Although dozens of federal governments, financial institutions and central banks have been apprehensive towards widespread bitcoin adoption citing threats, risks and criminalities, there have been some banking officials who have averred on the benefits and advantages of peer-to-peer decentralized digital currencies like bitcoin, litecoin and dogecoin.
The latest central bank to outline the positives behind the bitcoin technology is the Swedish central bank – the Sveriges Riksbank – which published a document that consisted of commentary on the present state of bitcoin in Sweden and the economic benefits of digital currencies on the retail payments industry.
The document, authored by Bjorn Segendorf, discussed the rudiments of virtual currencies, predominantly bitcoin, but also listed various other digital currencies, including dogecoin and litecoin. The document further outlined the central bank’s viewpoints towards the cryptocurrency market, which is quite a mixed bag.
Despite growing adoption in each corner of the globe, the Swedish bank noted that the bitcoin market in the country is quite limited, but cited the lack of consumer information and investor advisories in each nation as being a deterrent for interested parties.
In addition, the virtual currency market is fulfilling a function in Sweden: innovating the payment industry. However, the bitcoin value and the number of transaction that take place are still considerably lower than other conventional forms of transactions.
Nevertheless, even though it can be identified as being a risky investment, it is still essentially a positive innovation and experience in the marketplace – though, it might be a better option for micropayments.
“Virtual currency is one of many innovations on the Swedish payment market. It, like other innovations, is essentially positive, as it can contribute to meeting new payment needs and to making payments cheaper and more secure,” the Swedish central bank wrote in the report. “Those who choose to use a particular payment service can be expected to do so because it gives them an added value in relation to other payment services. This also applies to virtual currencies, which can for instance make some cross-border payments simpler, faster and cheaper. Another advantage is if the payer does not need to share sensitive information, such as card number or bank account number, with the payee. Virtual currencies may also be better suited for small payments, so-called micro payments, on some websites.”
Of course, the central bank did list the disadvantages of bitcoin and other virtual currencies, including lack of regulation and consumer protections, volatility, security risks and the possibility of it being utilized for illicit activities.
According to the central bank, the future of bitcoin depends on how much it is used.
The report has been described as being neutral and an informative, insightful look into the bitcoin market and its prevalence in Sweden.
“The impact of an innovation will depend on how much it is used. All available data indicate that the use of virtual currencies is very limited, in terms of the number of users, the number of transactions and also the value mediated. This means that both the positive and the negative effects are very minor. If the situation were to change, and virtual currencies were to be used to a much greater extent, the situation could well change.”
The price of bitcoin still remains steady as it is trading around the $600 mark.