A new study, published by Deutsche Bank, indicates that cryptocurrencies could gain widespread adoption over the next few years.
Cryptocurrencies To Change the Financial World
DeutscheBank published a new study called The Future of Payments – Part III. Digital Currencies: the Ultimate Hard Power Tool on the 27th of January 2020. According to the report, the bank stated that even though cryptocurrencies have been around for just over a decade, they have the potential to cause radical changes to the way we make payments, in banking, central banking and the balance of economic power.
The bank noted that it believes cryptocurrencies will go mainstream over the next few years. The massive adoption could happen with any cryptocurrency, as China is ready to launch its digital yuan initiative, and the Facebook Libra project is also expected to begin this year. The launch of these two digital currencies will see them become available to over 1.5 billion Chinese citizens and the over 2 billion Facebook users around the world. The combination of these two figures would account for more than half of the world’s population.
The report further stated that cryptocurrency adoption, at the moment, is similar to how the Internet was growing when it was first introduced. If the current rate of adoption continues, then we could have around 200 million blockchain wallets by 2030. This would be a substantial increase to the over 50 million blockchain wallets we currently have.
Bitcoin’s Volatility is a Problem
The report published by Deutsche bank is the third of its series as they explore the future landscape for the payment industry. In its first paper, the researchers discussed some cryptocurrencies, such as Bitcoin and Ethereum. Interestingly, they stated that Bitcoin wouldn’t be a viable payment cryptocurrency or a store of value due to its high volatility.
Regular Bullish DivergenceThe Bitcoin price is highly volatile, despite the current bear market. Prices are down from the all-time high of December 2017, but Bitcoin has been performing well since the start of the year. It has crossed the $9,000 mark, which is a substantial increase from the $6,400 it was trading towards the end of last year.
In the second part of its research, they discussed the benefits of cash as a means of payment and believe fiat currencies will continue to serve as the primary method of exchange for a few more decades.
While they maintained those points in the third paper, the researchers at Deutsche Bank highlighted that cryptocurrencies could combine the convenience of e-payments with the privacy of cash payments. With the launch of central bank digital currencies (CBDCs), some problems present in the global economy would be addressed.
According to the researchers, when CBDC’s are launched, central banks would be able to make interest-bearing accounts available to their citizens. This way, several problems caused by the traditional fractional reserve banking system would be solved. This is beneficial in several ways as governments wouldn’t feel obliged to bail out the big, but failed, institutions as they did during the 2008 financial meltdown.
The data from this research was obtained through a survey of 3,600 bank clients. While the older generation doesn’t hold cryptocurrencies or know how they work, the report cited that a large percentage of millennials – those born between 1981 and 1996 – had already traded or invested in cryptocurrencies and are sure they would be beneficial for the overall economy.