Could bitcoin reinvigorate Canada’s creaking payment system? A prestigious Canadian economics institute has released a report suggesting that bitcoin could become a “common currency” and reduce payment costs, if only regulators would provide clarity. It unveiled the report just as the Canadian government declared that bitcoin wasn’t legal tender.
The Montreal Economic Institute, a Quebec-based non-profit research organisation, said that although bitcoin use is still marginal, “recent developments suggest that this use is bound to increase.”Citing CoinDesk, the report suggests that merchant bitcoin sales are surging.
Bitcoin’s big advantage is its inexpensive payment system, said David Descôteaux, the report’s author. This enables people to send payments to people relatively cheaply, the document said – especially overseas.
But could bitcoin also be a useful alternative to payment systems in Canada? A 2011 report from a Government-commissioned Task Force, called Moving Canada in the Digital Age, suggested that Canada lagged far behind in its payments systems.
“Unless Canada develops a modern digital payments system, Canadians will be unable to fully engage in the digital economy of the 21st century,” said the report, adding that the country lagged behind “Twenty-seven European Union countries, the BRIC countries‚ even Peru and Romania” in its digital payments innovations.
Canada does have a money-by-email system called Interac, but it isn’t instantaneous, and the country still lags in mobile payment mechanisms, the three year-old report warned.
“The key words in that report are a more efficient system, a cheaper system, more open, more democratic and better governance. All the keywords I was reading apply to bitcoin,” said Descôteaux of the 2011 report. “There’s a reflection on what money should be in the future, and it is going more and more towards the digital side. Sometime, government plans will probably meet with bitcoin popularity.”
The MEI report – really little more than a primer on bitcoin – was released last week, shortly before a Canadian government official reportedly said that the authorities there did not consider bitcoin to be legal tender.
This didn’t faze Descôteaux, though, who pointed out that the Canada Revenue Agency had already issued guidance classifying bitcoin as a form of physical good, rather than as money.
“The regulators must be in many other countries thinking about it. What they say right now doesn’t mean that they won’t change their mind. And even if it’s not legal tender, it doesn’t stop anyone from using bitcoins,” he concluded. “As long as it isn’t illegal, it isn’t a threat to bitcoin’s popularity.”
The Institute will publish a more in-depth report exploring the regulatory landscape for bitcoin in April.
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