Bank of Canada: Widespread adoption will make Bitcoin more stable

Bitcoin House News August 31 CoinDesk News The Bank of Canada recently released a new working paper. Researchers believe that as digital currencies gain wider application, their price fluctuations will gradually stabilize.

Authors and researchers Wilko Bolt (from the Dutch Central Bank) and Maarten RC van Oordt (Financial Stability Department of the Bank of Canada) mentioned in the document an " economic framework " for analyzing the volatility of digital currency prices . The document was published on August 18 , which is the latest research result of the Bank of Canada. The interest of financial institutions in digital currencies has also been increasing in recent months.

The author analyzes the factors that affect the price volatility of digital currencies: payment demand, speculators, and die-hard fans of digital currencies.

Ultimately, they concluded that if digital currencies gain wider adoption, their prices will gradually stabilize.

They wrote:

“ Our prediction model concludes that as a digital currency becomes more mature, the entry or exit of believers or speculators will have less and less impact on the volatility of its market price. In the long run, the current high volatility of digital currency market prices is the biggest constraint on its widespread application. ”

The researcher also said that the fixed-supply digital currency is more like a commodity than a currency. The fluctuations in market prices are potential " early signs of development " and a possible future direction depends on how it evolves.

“ The future will tell us how much less volatile cryptocurrencies can become, ” they concluded.

The Bank of Canada's research work continues:

The Bank of Canada has also been studying the feasibility of digital currency and exploring the application of blockchain technology in the past two years. Earlier this summer, the Bank of Canada announced its own digital currency pilot project. Of course, the Bank of England has also done something similar. (Compiled by Bitcoin Home / Liu You)