Economist Says Bitcoin No Threat to the Dollar
There is no reason to believe the virtual currency bitcoin will replace the U.S. dollar, David Andolfatto, an economist at the Federal Reserve Bank of St. Louis, said during a November 16 talk at the Atlanta Fed's Jacksonville Branch.
Bitcoin is unlikely to threaten the dollar because the virtual currency's value fluctuates wildly. For example, in late 2013 the price of a bitcoin peaked at more than $1,000, rising from just $13 several months earlier. As of November 20, a bitcoin was worth about $360, according to CoinDesk, an online service that tracks digital currencies.
While bitcoin probably won't soon become ubiquitous, the virtual currency could become significant in international remittances, Andolfatto said. Sending bitcoins across borders is cheaper and easier than transferring traditional currency via most commercial remittance services, he pointed out.
Andolfatto also discussed the peer-to-peer nature of bitcoin, which removes middlemen like banks from transactions. Eliminating such conduits could transform not only banking and remittance services, but also brokerage and escrow services, and even voting and dispute resolution.
The Jacksonville event was the Atlanta Fed's sixth Public Affairs Forum this year. The forums feature noted speakers who explore national issues from an economic perspective. While the November 16 forum was the first in Jacksonville, it was the fourth at an Atlanta Fed branch office. Other 2014 forums examined topics such as aging and economic decision making, the economics of sports, and behavioral economics.