A senior official at the Reserve Bank of Australia (RBA) said that bitcoin is unlikely to be widely adopted in the country. He outlined the digital currency’s price volatility as well as the stability of the Aussie dollar as the main reasons.
No to Bitcoin
Speaking at an Australian Business Economists event earlier today, Tony Richards, RBA’s payments policy division head, stated that bitcoin is unlikely to be adopted Down Under.
According to Richards, one of the main reasons that Bitcoin is supposedly doomed to fail in Australia is the stability of the country’s fiat currency – the Australian Dollar:
The stability of the Aussie dollar means bitcoin is unlikely to be widely adopted. […] When a country doesn’t have a credible currency, then people might look for other ones. […] Whether those are cryptocurrencies or something like the US dollar is another issue, but we in Australia have a perfectly credible currency called the Australian dollar; we’ve had low and stable inflation for at least 25 years; and the likelihood that we’d have significant adoption of an alternative currency seems to be pretty low.
Yet, taking a look at the six-months performance of both Bitcoin and the Australian Dollar against the USD reveal alarming (for Richards) similarities. This is how the Aussie dollar has performed against the USD since January 2018:
And this is how Bitcoin (BTC) has performed against the USD for the same period:
While it can’t be denied that Bitcoin is having six months in 2018, it seems that the ‘perfectly credible currency’ is also headed downwards.
Richard also noted that “local usage is currently so limited that the RBA does not see it having any impact on monetary policy.” Of course, the incredibly “limited” usage of cryptocurrency is still more than enough for the country’s Taxation Office to classify it, along with all other cryptocurrencies, as assets and collect Capital Gains Tax (CGT) on gains.
Fundamental Lack of Understanding
Price volatility apart, Dr. Richard also pointed out that there is a lot of risk in using Bitcoin due to intermediaries:
There is also a lot more risk in bitcoin intermediaries than there is in the supervised banks and financial institutions in which households can hold their Australian dollars.
Let’s take a step back and look at the actual title of Bitcoin’s whitepaper. It clearly reads “Bitcoin: A Peer-to-Peer Electronic Cash System.” In other words, there are no intermediaries – and that’s one of the fundamentals of Bitcoin.
If Dr. Richard is referring to the blockchain, Bitcoin’s underpinning technology, and comparing its security to that of banks, plenty of arguments can be made, ultimately leading to the exact opposite conclusion – and Bitcoin’s uptime proves it.
What’s up @Visa need help? pic.twitter.com/Fi7vLOzf1f
— Bitcoin (@btc) June 1, 2018
The tweet emerged after Visa, one of the world’s largest payment solutions provider, experienced a widespread outage due to a “system failure”, causing thousands of users across the globe to be unable to access their funds.
Let’s go even further and assume that he meant the wallets which people use to store their private keys. If that is the case, his comparison is widely inappropriate. He would have to compare them to conventional wallets where people keep their cash and it is arguable at best how well such a wallet can keep your money protected from theft or loss.
What do you think about Dr. Richard’s reasoning? Will Bitcoin be able to flourish in Australia? Let us know in the comments below!
Images courtesy of TradingView, Shutterstock.
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