The Reserve Bank of Australia (RBA) has issued a briefing document in which it calls bitcoin a “limited” risk to the country’s payment systems. The document was published some time ago, but was only recently made public.
The briefing (which can be read at the bottom of this article) describes bitcoin’s method of confirming transactions as “an inefficient use of resources” and says that the digital currency faces an uphill battle in dislodging the current payments infrastructure:
Good understanding of bitcoin
Primarily an informational document, the briefing notes a number of risks posed by the potential widespread adoption of bitcoin to the RBA, including a “reduced ability to implement monetary policy”, a fall in revenue from the minting of money, and a potential to destabilise the financial system if there was a rush to sell bitcoins “because of a loss of confidence in the core bitcoin system or large third-party service providers.”
The document argues that a significant amount of computing power is wasted in the winner-takes-all race to mine blocks, and points out that the first-mover advantage, which makes it difficult for bitcoin to replace existing payment systems, also makes it likely that it will remain the pre-eminent digital currency.
If nothing else, the slightly out-of-date document, which includes references to Mt. Gox’s trading volumes, for example, shows a remarkably strong understanding of the ins and outs of digital currencies.
Government regulation around bitcoin, the document suggests, is born not from ignorance, but perhaps because they understand the implications all too well.
Reserve Bank of Australia image by Newtown Graffiti
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.