BitCoin, one of the world’s most popular digital currencies, is little more than a fad, says MasterCard’s global head of emerging payments, Jorn Lambert. Photo: Bloomberg
MasterCard's global head of emerging payments, Jorn Lambert, has labelled BitCoin as a currency for "geeks" that will not reach mass adoption, despite experts warning it must be regulated to avoid being used for tax evasion.
BitCoin is one of the world's most popular digital currencies, a cash without a country favoured by anti-establishment activists and hackers.
Despite its steady rise in recent months, turning some early believers and high-profile investors into multi-millionaires, Mr Lambert says it is little more than a fad that lacks the fundamentals needed to be taken seriously.
Unlike traditional forms of money, BitCoin does not have a core backer, exists entirely on the internet and is extremely difficult to trace. Where the Australian dollar's value is supported by the national economy and Reserve Bank, BitCoin's value is based solely on how much people are willing to pay.
Speaking exclusively to The Australian Financial Review, Mr Lambert said it was normally dangerous to rule out any emerging technology or form of payment, "but honestly, to get scale in any of these things you need to be frictionless and have a distribution method that is massed," he said. "Having a virtual currency that is only living in the virtual world and then you can occasionally cash out - other than geeks, who is really going to latch onto that?
"We think the best payment distribution methods remain the banks. You can call us old-fashioned, but many people are old-fashioned as well, so it's not something that keeps me awake."
Mr Lambert said his organisation dealt with billions of transactions per month compared with BitCoin's tens of thousands, and that any serious currency needed collateral and security.
"Every partner in our system needs to be a regulated institution and provide collateral so that if the Greeks or Cypriot banks go pear-shaped tomorrow we are still guaranteed payment. We're not playing in experiments. Our core value is payment guarantee and for [that] you need a very robust and regulated system.
"So unless you're talking about millions and billions, it's an experiment. It's kind of cool, but that's not enough."
"YOU CAN'T ARREST AN ALGORITHM"
But tax and payment experts warn Australian authorities must tax and regulate BitCoin or risk it being used for criminal activities.
The director of the Uniting Church's Justice and International Mission Unit, Mark Zirnsak, said his organisation first learned about BitCoin when it was used by criminals to pay for child pornography.
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