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As the debate rages on whether bitcoin is a legitimate currency or just imaginary money, expert from Wall Street analyst stripped down the argument to three simple parameters — safety, liquidity and return.
These attributes are the hallmarks of reserve currencies like the U.S. dollar, the euro or gold, according to Bank of America Merrill Lynch’s head of global commodities and derivatives research, Francisco Blanch.
For now, bitcoin BTCUSD, -2.14% falls short in making the cut even though it is gaining in popularity among a certain class of investors who believe the cryptocurrency will soon come out of the shadows and claim its rightful place as a legal tender.
The volatile nature of the cryptocurrency also undermines its credibility.
Unlike reserve currencies, bitcoin does not have an interest rate that is set by a central bank so it is difficult to quantify its returns. It also does not offer much in the way of diversification given its lack of correlation to other major currencies, precious metals, bonds or equities.
Still, bitcoin has offered phenomenal returns in terms of absolute value that few assets can come close to matching.
Details from source http://www.marketwatch.com/story/this-is-what-it-will-take-for-bitcoin-to-become-a-legit-currency-2017-07-25
