Per Morgan Stanley, it will take a long time before bitcoin gets accepted as a way to make instant payments on a regular basis. This is because with the virtual currency the speed of transactions lags that of other payment options such as credit cards. And even though Bitcoin is considered secure, centralized payment systems such as Mastercard and Visa are highly efficient as well as cost-effective.
“[Centralized payment systems process] more than 5,000 transactions per second with capacity to process volumes multiple times that number. Bitcoin in contrast takes 10 minutes to clear and settle a single transaction vs. Ethereum that takes 15 seconds,” wrote Morgan Stanley in a note.
Additionally Mastercard and Visa are accepted in worldwide locations numbering over 44 million. And in the course of the next five years it is expected that the acceptance network will grow exponentially since the increasing use of connected devices such as smartphones and IoT devices will make the embedding of payments functionality to new end points all the more popular.
Though there are some merchants who allow payments in bitcoins, their number is significantly small. Other factors working against Bitcoin include the wait times as well as higher transaction costs.
Per Morgan Stanley one of the advantages of bitcoin was its decentralized system which made it hard for collusion among participants with a view to profiting. Manipulation or attacking such as a distributed system is also harder making it more secure.
The note by Morgan Stanley on bitcoin coincides with the commencement of trading of the virtual currency on the financial futures market of the Chicago Mercantile Exchange. Earlier last week bitcoin futures trading also began on the CBOE exchange in Chicago.
According to analysts the beginning of bitcoin trading on the Chicago Mercantile Exchange will increase the interest that the virtual currency has generated and is likely to push the price higher. While the bitcoin futures contract on the CBOE is based on bitcoin’s closing price from Gemini exchange, an entity owned and run by Tyler and Cameron Winklevoss, the contract price of the crypto currency on the Chicago Mercantile Exchange will be based on prices culled from various exchanges. This is expected to offer investors increased transparency.
The start of trading in bitcoin futures contracts comes as the warnings against the crypto currency increase in the wake of a surge in price. Prominent central bankers, investment bankers and even politicians have warned against the virtual currency saying it is a bubble that will eventually burst.