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Do Cryptocurrencies Meet the Criteria for Currencies? Mavsoment 1) Bitcoin is an Inefficient Medium of Exchange Division (1) Do Digital Currencies Pose a Threat to Sovereign Currencies and Central Banks?, Daniel Heller, PIIE. Source: Investment Strategy Group, Bloomberg, Cryptocompare.com. Average Transaction Fees (US$ Monthly Average) 6 - $ Per Transaction wo a N 1 0 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Processing is expensive. The average transaction cost is ~$3.40, rendering transfer of small fund balances uneconomical. Processing is slow. Transaction processing typically takes a minimum of 10-20 minutes, but can take up to 18 hours if the network is congested (Visa and Mastercard authorize transactions in ~20 milliseconds). Bitcoin is not broadly accepted. A mere 9k merchants accept bitcoin, compared to the 37mil that accept Visa and MasterCard, and the billions of merchants and people globally that accept US dollars.! Further, the IRS considers all cryptocurrency gains a taxable event (including for de minimis purchases). 13 HOUSE_OVERSIGHT_025676