Although the value of Bitcoin has risen nearly 1,800 percent in 2017, many currency experts believe it will be a long time before consumers can actually use the cryptocurrency as a form of payment. In a note to its clients, Morgan Stanley stated the unprecedented run-up in the value of Bitcoin has given investors the impression that the cryptocurrency could soon be accepted as an everyday payment system.
Morgan Stanley also noted that the popular cryptocurrency will have a difficult time competing with centralized payment systems such as Visa, MasterCard and Discover. The firm stated that Bitcoin could offer some advantages since it is decentralized, but the cost advantages of using traditional payment networks are quite formidable. Additionally, Morgan Stanley said that centralized payment networks are far more efficient.
When comparing the time it takes to clear transactions, Bitcoin takes nearly 10 minutes to clear while Visa and MasterCard can clear thousands of transactions per second. Additionally, the world’s two largest payment networks are accepted at millions of locations worldwide. Morgan Stanley also said that number is expected to grow over the next few years as more devices get connected, making it far easier for consumers to buy and sell goods.
Some well-known vendors do accept Bitcoin as a form of payment, and rumors are swirling that tech giants Amazon and eBay may start accepting the cryptocurrency as payment in the not too distant future. However, the amount of vendors allowing Bitcoin as payment pales in comparison to centralized networks.
Morgan Stanley does see value in the decentralization of payment systems, referring specifically to blockchain technology, which is the ledger system used to record digital currency transactions. The firm states that decentralized payment systems such as blockchain make it difficult for companies offering digital currencies to collude with each other.