Bitcoin has received much attention from big name investors recently, and now one has come out to speak about its practical future and likely relationship with fiat currency.
Speaking in an interview with Investopedia, Gil Luria, Managing Director at the Los Angeles-based investment bank Wedbush Securities, underlined the huge potential of Bitcoin and considers there little doubt about its status in the economy, in spite of the IRS’ restrictive recent directives on cryptocurrency.
Asked whether March’s IRS virtual currency tax guide would become the definitive stance taken by authorities not only by US but around the world, Luria said, “No, I'd go back a year when FINCEN [The Financial Crimes Enforcement Network] put out a report saying they would regulate Bitcoin like any other money business.”
An interesting angle indeed, one which Luria subsequently corroborated, citing its being a “watershed moment” because it steered many people’s views away from Bitcoin being “inherently illegal.”
“The fact that the organization responsible for preventing terrorist financing said we see a legitimate use for this, that changed my mind and a lot of other people's mind that Bitcoin can exist within the mainstream economy,” he said.
A million dollars?
Luria was also vocal on Bitcoin’s potential to transform traditional financial practices, especially with regard to private enterprise.
“If Bitcoin lives up to its potential and becomes the working capital of international trade, instead of countries and companies sitting on yen, U.S. dollars, Swiss francs, they could just use Bitcoin for cross-border transactions,” he said, “It would be far more efficient.”
Wedbush became the first investment US bank to accept Bitcoin as payment for fees, and Luria sparked some interest at last month’s Inside Bitcoin conference where he said on a panel that “if a lot of things happen with it and Bitcoin lives up to its promises, it could be half a million to a million dollars.”
He has been quick to add a cautionary proviso to his words, however, telling Investopedia that only if Bitcoin became the main instrument for international corporate transactions, “Bitcoin would be taking $10 trillion of foreign currency that sits in multinational companies […] Each bitcoin could be worth $1 million. The probability of that happening would be very low but it is possible.”
Regarding the future of fiat and cryptocurrency, Luria also remained pragmatic.
“Bitcoin won't replace sovereign fiat currency anytime soon, but it will be there to supplement sovereign currencies,” he speculated, and added that Bitcoin could be “efficient go-between” for foreign exchange transactions as opposed to the current system allowing banks to charge “extraordinarily high fees.”
Luria’s views are nevertheless somewhat rare among the investment community, whose more usual comment revolves more around interest in a disruptive financial instrument than cryptocurrency’s explicit power to alter the existing framework.
To this end, he had high praise for the Bitcoin network’s more radical areas, notably blockchain.info.
“They try to make payments outside regular channels. No one is going out of their way to shut that down. Blockchain has no country, no bank accounts, and does no business in any currency but bitcoin,” he continued, adding, “They are a very unique and fascinating organization.”
In spite of IRS guidance, Luria’s argument provides an interesting additional angle as to why corporate interest in Bitcoin is growing while governmental interest is increasingly negative. The community will now no doubt be watching the value of BTC to see if the interest and investment support will manifest in a rallying in price.
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