What future for electronic currencies?

What future for electronic currencies?

This summer, much has been written about the Bitcoin. On the 1st of August, Japanese police arrested Mark Karpelès, the French CEO of MtGox, an exchange platform for the Bitcoin electronic money. He is accused of having accessed the platform’s computer system to falsify data for its accounts. It’s the moment for Limonetik to take stock of the state of play for electronic currencies.

According to a study carried out by BitPay, over 100,000 merchants worldwide now accept Bitcoin. The number of transactions for the European region reached record levels in Q2 of 2015: 102,221 transactions per quarter, or 34,074 per month.

In Europe, North America and the Asia-Pacific region, transaction growth has increased by 20% over the same period (2nd quarter of 2015). But the real Bitcoin boom is to be observed in Latin America! Growth in quarterly transaction volume has reached 120%, with quarterly transactions almost doubling.

Making Bitcoin a currency in its own right

The Australian Senate committee will ask Parliament to consider the Bitcoin as a real currency in order to regulate it with taxes and to help with the fight against money laundering. This law would force all Australian Bitcoin and other electronic currency businesses to register with the supervisory authorities in order to provide full information on their transactions. If Australia chooses to adopt this recommendation then it will join the United Kingdom and Spain, which already consider the Bitcoin as a currency in its own right. Canada and Singapore have also modified their anti-money laundering legislation to include Bitcoin.

In France, a few banks are getting to grips with electronic currencies if one believes the explanatory pages dedicated to Bitcoin (Crédit Lyonnais) and articles published in bank journals (e.g. BNP Magazine published by Quintessence Paribas). Société Générale even explains that they have set out to find an electronic currency expert to start working on Bitcoin. Although no major French bank has officially started business activities with Bitcoin, they seem to be preparing for the very likely event of a rapid democratization of electronic currencies. On the other side of the Channel, the Bank of England has raised the question of whether central banks could learn from Bitcoin and create their own digital currencies, as discussed in a document published on the One Bank Research Agenda website.

According to the BitPay study, the main parties accepting Bitcoin payment include IT companies, gift card platforms, financial services and market places. Electronic currencies appear to be gradually gaining ground. Time will tell if the virtual currency will eventually replace the traditional one.