Despite a largely successful first decade, the Reserve Bank of Australia (RBA) claimed in an article published today, June 20 that a “material take-up of cryptocurrencies for retail payments” will not happen in the foreseeable future.
The article titled ‒ Cryptocurrency: Ten Years On ‒ sought to provide insight regarding the emergence of cryptocurrencies and the proposition that these new payment tools would eventually overtake fiat currencies including the Australian Dollar (AUD).
As one would expect, though, a large portion of the article deliberated on the deficiencies in cryptocurrencies.
Among other things, the RBA report suggested that despite the decentralization promised by cryptocurrencies, most users still have to go through a centralized party such as a crypto exchange to transact their assets.
“The roles undertaken by intermediaries effectively reinserts the need for some form of trust in a central party for most users,” the article claims.
Another section highlighted the Bitcoin scalability issue, which led to the birth of several other cryptocurrencies trying to offer faster transaction times. The RBA bragged that the country’s new Fast Settlement Service settles around 1,000 transactions per second while other payment systems process tens of thousands of transactions per second.
On the volatility front, the RBA report focused on the fact that the price of most cryptocurrencies, especially Bitcoin fluctuates to such an extent that users would not consider using it for retail transactions.
Despite noting efforts such as the Lightning Network which aims to solve Bitcoin’s scalability problems, the authors claim the closest that cryptocurrencies can come to becoming a unit of payment for retail transactions are stablecoins.
Even in that regard, the paper suggests that stablecoins, including the one planned by Facebook, cannot reach mainstream adoption since a central entity is often required to maintain the coin’s reserve.
The ultimate conclusion then is that as long as the Australian dollar offers a more “reliable, low-inflation store of value,” then crypto adoption for direct payments won’t happen in the foreseeable future.
Meanwhile, the latest report arrives a few weeks after the country updated rules for ICOs and cryptocurrency platforms operating within its jurisdiction.