A Bank of Canada working paper released this week says central banks are unlikely to cede their monopoly on issuing currency to a new generation of web industry giants, such as Facebook and Amazon.

That’s because virtual currencies are prisoners of their basic function: Getting consumers to buy more stuff.

As a result, these companies are unlikely to ever make their virtual currencies fully convertible into regular cash, according to the study, Some Economics of Private Digital Currency. And without full convertibility, the use of virtual money is limited to the virtual world.

The case of Bitcoin – a fully convertible, pure digital currency – is more problematic. Earlier this year, the U.S. Treasury department started requiring that all virtual transactions worth more than $10,000 (U.S.) be reported to authorities to prevent virtual currencies being used for money laundering and other illegal purposes.

The authors don’t reach a firm conclusion on whether governments should crack down on virtual currencies, pointing out that regulation might stifle innovation. At the same time, they warn that “multiple competing platforms creates inefficiency” that will dissuade people from embracing them.

Internet is getting more and more involved in our daily life. As a deviant, the bitcoin appears. Even though it is only a virtual currency, people are now making it useable in real world suck as using bitcoin to buy a cup of coffee or anything online. A revolution of currency is up.

Source: http://www.theglobeandmail.com/report-on-business/economy/economy-lab/virtual-cash-is-no-threat-to-the-real-thing-bank-of-canada-paper-says/article15410873/