Bitcoin may be a miniscule player in the payments system, but it's receiving a lion's share of the limelight. In the May—August issue of EconSouth, strategic information research analyst Sadat Karim and associate editor Nancy Condon explored the cryptocurrency's potential as a mainstream currency.
With strong points such as consumer privacy and relatively low transaction costs, bitcoin has its share of proponents. Of course, there's a dark side to the anonymity bitcoin provides, which worries payments experts, regulators, and law enforcement alike. Those concerns are just one of the hurdles bitcoin would have to overcome to be a serious contender in the payments system—other pitfalls include wild swings in its value, processing delays (bitcoin transactions take about 10 minutes to authenticate), and even accounting hassles.
"Whether the bitcoin dream will ever be fully realized remains to be seen," Karim and Condon wrote. However, even skeptics see potential in bitcoin's underlying technology, especially the block chain architecture. The authors concluded that by "protecting consumer privacy and making transfers comparatively fast and secure, the potential payments systems of the future based on block chain technology may be more flexible, cost-effective, secure, and accessible—with or without bitcoin."
To learn more about what bitcoin means to the payments industry, read the full article in the May—August issue of EconSouth.