Bitcoin to be sixth largest reserve currency, research says

Research firm Magister Advisors recently predicted that Bitcoin will become the sixth largest global reserve currency by 2030, meaning it could be as widely used as the Australian dollar.

He said: "Blockchain is without question the most significant advancement in enterprise IT in a decade, on a par with big data and machine learning".

Gil Luria, an analyst at Wedbush Securities, sent a note to clients and gave a forecast for the Bitcoin Investment Trust, "We believe bitcoin and its associated blockchain technology have the potential to disrupt the existing financial infrastructure over the next few years".

Gemini is still a bit player in the space by volume, but the halo effect the publicity around the launch of the exchange may have also driven increased business to older, more established Bitcoin exchanges as well.

According to the research, banks are not necessarily using this technology to replace core infrastructure, but to work alongside it by storing metadata surrounding settlement and clearing.

The digital currency, now trading at $498, has surged 50 per cent in the past five days alone, as its gains have begun accelerating dramatically on the back of the EU's recent decision to accept it as a currency.

That isn't to say U.S. investors are neglecting the currency.

Bitcoin's first major price surge in 2013 was short-lived, as the price plummeted from about $1,000 to less than half that value in several months.

Millar continued: "Banks will initially be unwilling to remove the core infrastructure that handles the process of clearance and settlement but they will increasingly run parallel blockchain processes, evidence by the spike in investment that our poll has identified".

The driver beneath Bitcoin is the underlying blockchain technology which has been in the news during the past months and featured in the October Bloomberg Markets Most Influential Summit. Traders are addicted to volatility and we mustn't underestimate the significance of speculation. It noted that the majority of bitcoin transactions are now taking place in developing economies, reflecting the appeal of the robustness of the technology in economies where an estimated two billion adults do not have bank accounts and especially in markets where corruption is endemic in financial services. "Reported numbers do not factor in the 300,000 daily "off-chain" transactions by large wallet/vault players such as Coinbase, Circle and Xapo, pushing the daily total number of transactions to around one million", said Millar.