Recently, I read Fang, Songyi’s blog about BitAssets. In respond to his blog,I want to comment as follows:

In the last post, we talked about the general idea of Bitcoin. The increasing demand for bitcoin attract people’s attention on becoming the next generation of payment method. However, from my analysis, it shows that Bitcoin will never replace any currencies. Firstly, the reason that why virtual currencies replace cash because they cannot provide a secure feeling to the public. The exchange rate for virtual currencies swing a lot day by day. It goes up 500% today but it can be ended up as a recycle paper tommorow. Secondly, there is no government regulation on this sort of currency. It is totally decided by the market and the issuer. When there is any problem on your currency, no one will take up the responsibilies. For example, If your currency is stolen by a hacker, you cannot track it back because the account is all annoymous. When the company of issuer shut down, your money will become nothing. It is not profitable for the virtual currencies to expand to become fully convertible, compare to government currencies. Facebook creadit shows us a good example.

With over than a billion uses around the world, a virtual currenct such as facebook creadit could use as many real curriencies for exchanging goods and service online.However, Facebook abandoned this creadit program because they found out a confusion with other currecies used inside facebook apps. Facebook feel there is a diffculty to control the flow of payment. For the government, it is hard to record all the transaction with virtual currency for tax purpose. Therefore, they won’t accept it as offical currency for trades.

http://www.cbc.ca/news/business/virtual-currencies-won-t-replace-cash-central-bank-says-1.2425237