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Merrill Lynch / BofA release report on bitcoin

MerrillLynch / Bank of America have released a report on bitcoin. Key points from their intro:

  • Tamper-proof, limited supply and divisibility – “We believe Bitcoin can become a major means of payment for e-commerce and may emerge as a serious competitor to traditional money transfer providers. As a medium of exchange, Bitcoin has clear potential for growth, in our view.”
  • Store of wealth for the underground economy? – “It has been reported that Bitcoin may help users avoid high taxes, capital controls, and confiscation. The correlation between CNY’s share of volume of all Bitcoin exchanges and price of Bitcoin is high and rising (Chart 1). That said, the fact that all Bitcoin transactions are publically available and that every Bitcoin has a unique transaction history that cannot be altered may ultimately limit its use in the black market/underworld.”
  • Volatility – “Bitcoin’s role as a store of value can compromise its viability as a medium of exchange. Its high volatility, a result of speculative activities, is hindering its general acceptance as a means of payments for on-line commerce.”
  • Fair value? – “Is Bitcoin a bubble? Assuming Bitcoin becomes (1) a major player in both e-commerce and money transfer and (2) a significant store of value with a reputation close to silver, our fair value analysis implies a maximum market capitalization of Bitcoin of $15bn (1BTC = 1300 USD)”

You can view the full document on Scribd.

Update: The report has been removed from Scribd.