The Fed pays close attention to the development of bitcoin, researchers say the friction significantly
Researchers from the Federal Reserve Bank of New York published a research report about bitcoin, the bitcoin is really no friction?” The report, the author thinks there is a big difference between the bitcoin exchange, so that the bitcoin digital currency, is not really a frictionless conclusion.
The Fed’s research highlights the “natural phenomenon”
The latest fed research report pointed out that bitcoin is the world’s most popular encryption currency, it can eliminate some friction in the settlement process. According to the authors, although a number of these currencies in the exchange of the transaction, they still suffered a “significant friction”, but the trading environment had been removed from the necessity of the existence of some intermediary institutions.
“Research shows that, in the trading market of bitcoin transactions, there are still significant friction, which leads to the price difference between the bitcoin exchange continued. The trade friction, reduce the enthusiasm of market participants in the use of bitcoin as a payment option.”
The study of Bowen pointed out that in solving the problem of friction, to the relatively free trading wallet purse. However, when the currency exchange into the ecosystem, it will have “high exchange rate volatility.”
In the eyes of the researchers, this is a problem, which is why many large companies to accept bitcoin, bitcoin received will be immediately converted into legal tender. The author mentioned that DELL, Microsoft and Expedia these examples, because these enterprises are to receive bitcoin for third party processing, which will lead to more cost and counterparty risk.
The report also describes the risk of bitcoin, such as the Mt.Gox bankruptcy case has caused a serious loss, it also mentioned between Bitfinex, Bitstamp and BTC-e three exchange price difference.
“Between the major bitcoin exchanges any bitcoin price difference, should be quickly eliminated by arbitrage (commonly known as the bricks), which forced the exchanges between the currency price to close,” the authors explain.
However, the three price record currency exchange, in fact is not true. The following chart shows the huge gap between the three major currency exchange.
Although the report pointed out that the price deviation between exchanges is interesting, but it is for the traditional banking system may be not what attraction. In the author’s opinion, the majority of users to avoid greater friction and need to be converted into the bitcoin currency, so it can not be used as a unit of account.
The research shows that the development of the Federal Reserve Bank of New York, the agency is on bitcoin, but it believes that bitcoin is currently the arbitrage is not a natural phenomenon. However, bitcoin users can also be interpreted as a positive signal, because the world’s largest monetary authorities are paying close attention to one of the virtual currency, this is a sign of progress.