Investment banking firm UBS may not be completely dismissing Bitcoin’s potential to eventually become a viable form of payment, but it clearly believes that the world’s most well-known digital currency is not yet ready to play a mainstream role as real money.
As CNBC reports, the bank told clients that "Bitcoin is still too unstable and limited to become a viable means of payment or a mainstream asset class. Owing to its lack of price stability, bitcoin falls short of criteria that need to be satisfied to be considered money."
UBS has reportedly identified several obstacles preventing Bitcoin from becoming a mainstream form of money, including recent price swings that the bank has attributed to speculative interest. Strategist have also cited the lack of developer progress on issues related to scalability, block size, and speed.
The firm released a 34-page report on Thursday that highlighted the limitations, suggesting that Bitcoin’s usefulness is limited by its inability to handle anything more than a fraction of the transaction volume managed by major credit card companies and others. The report also estimated that Bitcoin’s value would need to increase to roughly $213,000 to properly replace the money supply in the United States.
Despite that cautious assessment, the report remained open to the possibility that Bitcoin could achieve status as a “viable payment mechanism” if it can obtain proper regulatory oversight and overcome its scaling challenges.