bitcoin: A potential fiat currency?

Quantitative Easing has been a much talked about subject throughout the year 2013, with "Will happen/ Won't happen" analysis coming in from all quarters as and when the US jobs data or the inflation numbers suggested that the Fed is indeed achieving its set targets and the situation is ripe for tapering. The central banks around the world are assessing the likely impact of QE tapering on their own currencies but one currency that is making waves around the world and is likely to remain untouched by what Ben Bernanke does now or Janet Yellen does in the future is the bitcoin.


News about the future prospects of the currency has been a bit of a mixed bag with the US online retailer Overstock.com giving it an emphatic nod of approval with an announcement that it would start accepting the currency by as early as the end of 2014 and People's Bank of China (PBoC) forbidding financial and payment institutions from carrying out bitcoin related business. This happened even as the bitcoin was scaling new heights in terms of its value, touching $1200 but the news did act as a dampener and the virtual currency was soon trading at $800 for a bitcoin. General citizens in China are still free to exchange the virtual currency among themselves, not against the local currency though.

Reserve Bank of India has followed suit albeit with a warning in place of a downright ban. The warning pertains to potential risks that dealing with the currency hold in terms of money laundering and cyber security. Players in the bitcoin domain in India now await directives from the RBI in terms of a clear policy in order to carry out the buy sell activities while avoiding being on the wrong side of the law. Entities such as INRBTC.com and buysellbitco.in have thus suspended their operations for now.

Discounting the fact that bitcoin finds itself entangled in the web of regulation, it faces no serious threat to its existence. The general consensus among analysts is that these moves by central banks may delay the use of bitcoin as a full-fledged currency but this currency is here to stay.