International Institute of Finance, a global banking group, has said online currency Bitcoin may have shown unexpected success but its future as a broadly accepted exchange medium is limited. The institute’s report said more regulation of Bitcoin exchanges and transactions could strengthen its legitimacy among consumers and ease regulators` doubts about it. The institute represents more than 450 banks and financial institutions. For the present, the report said, Bitcoin faces significant resistance in countries like China. And because most of the market is dominated by speculators rather than users, Bitcoin`s value in other currencies is particularly volatile. It is estimated that 50% to upwards of 90% of Bitcoin owners are speculators, the report said, adding this contributes to the substantial price fluctuations seen recently. Unlike other currencies, Bitcoin does not have the backing of a central bank or government. Instead, the units are generated by a complex computer algorithm designed by one or more anonymous people in 2009. The institute characterized Bitcoin as effectively a ‘fiduciary currency’ with no intrinsic value of its own and dependent on trust that it can be exchanged for a more common currency like the dollar. That makes it inherently fragile, the report said.
