Bank of America Says Bank Acceptance ‘Crucial’ For Bitcoin Success

Bank of America Merrill Lynch has said that winning over the acceptance of banks is crucial to bitcoin’s long-term success as a currency.

The digital currency, which leads the field by market cap, transaction volume and general awareness, has many of the characteristics needed to take it mainstream, according to the report published by the company, one of America’s leading banks.

However, their findings argue that only once bitcoin is accepted by banks can it begin to catch on among consumers at a more mainstream level.

It comes as part of a wider report into cryptocurrencies by Francisco Blanch, one of the bank’s leading strategists for commodities and derivatives.

While the report stressed that it was unaware of any banks that took exposure to cryptocurrencies at the moment, this would be the ‘watershed’ event that propels the currency into the virtual pockets of mainstream users.

Bitcoin can be used for a wide range of transactions already, becoming a more widely supported payment method by the day.

In Japan and South Korea, consumers are already using bitcoin for consumer purchases, with Bic Camera recently announcing support for bitcoin as a payment method across their stores, as just one example of this growing trend.

Similarly, bitcoin is used extensively for online transactions, and this will only continue to gain prominence as more people get set up to send and receive bitcoin.

While the banks have yet to get fully on board, financial services companies are among some of the biggest backers of the underlying blockchain technology, and with central banks actively looking into digital currencies in their own right, it’s likely bitcoin will continue to develop its audience.

Blanch’s white paper report looked at investing in digital currencies alongside other commodities including silver and gold, reflecting on liquidity and volatility in the markets. He noted that market volatility is now coming into line with the natural volatility in these markets.

This would be a crucial prerequisite for any banks looking to take exposure to bitcoin holdings, which could in turn influence its uptake across the board.

“Bitcoin's volatility is very high compared to the euro, the yen or even gold … But it fell twice last year below the volatility of silver, the world's currency for 400 years.”