Boston Fed Researchers: We’re Bullish on Bitcoin as a Technology

The Federal Reserve Bank of Boston became one of the first members of the US central banking system to issue an in-depth paper on bitcoin last September that suggested the digital currency was emerging as a cost-effective online shopping tool.
Fast forward to today, however, and the number of large merchants entering the bitcoin ecosystem seems to be stagnating. Though major e-commerce players such as Dell and Overstock are expanding the payment option overseas, there has yet to be a billion-dollar merchant of their stature to begin accepting bitcoin in 2015.
In a new interview, Boston Fed researchers Stephanie Lo and J Christina Wang indicate that they remain interested in developments in the bitcoin space, and that they have noted a number of reasons why bitcoin’s use case in online commerce may have become less compelling since the publication of their original report, ‘Bitcoin as Money?’
Lo and Wang told CoinDesk:
‘One likely explanation is that saving on transaction costs is only one factor in a merchant’s decision whether to adopt bitcoin. We can easily imagine that bitcoin represents a technology that is still considered too risky and that may well deter some merchants from adopting it.’
In their report, Lo and Wang found that merchants were offering discounts to bitcoin users, in part, because of the lower processing costs the payment method offered, a factor they asserted made online payments perhaps the most attractive use case for bitcoin.
Still, Lo and Wang suggest that recent trends signal that bitcoin suffers from a perception problem and that the majority of merchants do not yet see how it could be a beneficial payment tool.

This post was published at Coin Desk on February 24, 2015.