“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.“
That quote is from David Woo, FX and Rates Strategist at Bank of America/Merill Lynch.
Woo is one of the most genuinely brilliant minds on Wall Street, and that statement is huge.
Here’s why: Lots of folks have made positive noises about Bitcoin. Ben Bernanke, for example, said it “may hold long-term promise” but mostly spoke very generally about being open minded towards digital currencies. He never said anything specific.
Various hedge fund managers have made positive statements about Bitcoin, but you have to take their comments with a grain of salt. Most of them aren’t experts in economics, and just get excited by things that go up or down by a lot (which obviously Bitcoin does in spades).
But Woo’s analysis represents a top-flight mind at a major financial institution assessing it in a serious way, and coming to the conclusion that it could be the real deal.
Woo even identifies the three things that need to happen for Bitcoin to be worth what it currently is:
Our fair value analysis suggests that to justify the current Bitcoin valuation, it will need to (1) account for at least 10% of all global e-commerce B2C transactions, (2) become one of the top three players in the money transfer industry, and (3) acquire a store of value reputation close to silver.
Bitcoin is lodging into people’s minds, and not just as some theoretical amusement that might one day be meaningful, but as something that can be defined and judged against benchmarks. As such, Woo’s note represents the big endorsement of Bitcoin to date.
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