Deutsche Bank, one of the world’s leading financial services companies has predicted that cryptocurrency could replace cash entirely by 2030 due to the fragility of the current system.
Writing in its research report Imagine 2030, Deutsche Bank said that the structure that keeps fiat currency in place could crumble, allowing cryptocurrency to rise to replace it.
“The forces that hold the fiat money system together look fragile, particularly decades of low labour costs. Over the next decade, some of these forces could begin to unravel and demand for alternative currencies, from gold to crypto, could take off,” the banking giant wrote in the report.
“Until now, cryptocurrencies have been additions, rather than substitutes, to the global inventory of money. Over the next decade, this may change. Overcoming regulatory hurdles will broaden their appeal and raise the potential to eventually replace cash.”
Cryptocurrency will replace cash, say blockchain experts
The Deutsche Bank predictions have been welcomed by the blockchain industry, which – perhaps unsurprisingly – sees crypto as the future of currency.
“Cryptocurrency definitely has the potential to replace cash within the next 10 years,” said Peter Wood, CEO of CoinBurp.
“Mass adoption of blockchain wallet holders following a public decline in cash use, wavering distrust in modern day banks and a fragile fiat system, is only set to increase as the legitimacy and popularity of digital currencies continues its skywards trajectory.”
The increasing interest of major technology companies in cryptocurrency, such as Facebook with the launch of Libra, is likely to help move crypto into greater mainstream use. However, there are still significant hurdles to overcome.
“They must become legitimate in the eyes of governments and regulators. That means bringing stability to the price and bringing advantages to both merchants and consumers,” said Marion Laboure, lecturer in Economics & Finance at Harvard University, writing in the Deutsche Bank report.
“They must also allow for global reach in the payment market. To do this, alliances must be forged with key stakeholders – mobile apps such as Apple Pay, Google Pay, card providers such as Visa and Mastercard, and retailers, such as Amazon and Walmart.”
However, this is an issue that Wood believes the industry can overcome.
“With proper regulation and guidelines in place, cryptocurrency can serve as a powerful digital alternative for businesses and individuals to utilise for increased security, speed and efficiency over traditional banking transactions.”
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Cryptocurrency in 2020: Laying the foundations
For all of this to happen, the next year is set to be critical for the cryptocurrency industry, and according to Kiran Raj, CEO of Bittrex Global, there are a number of key changes that are set to occur in 2020.
The first of these is the diversification of digital assets, with digital tokens used for non-payment purposes becoming more distinct from conventional cryptocurrencies.
“For much of its history, blockchain has been synonymous with cryptocurrency, the most prevalent and prominent use case of distributed ledger technology. There is a significant growth runway for cryptocurrencies in their own right, but they are not the beginning and end of the emerging digital asset economy,” said Raj.
“In 2020 we expect to start seeing more of the next stage – towards digital tokens as vehicles for a wider range of underlying assets, from property to equities. Over time, the advantages of digital asset trading – in cost, speed and efficiency – have the potential to convert those who might not initially believe a physical asset can be safely transacted via a digital token.”
Regulation is also set to crystallise in some areas, paving the way for future legislation on the industry.
“Regulation in its own right is likely to be one of the prevailing blockchain trends in 2020. January will mark the formal arrival of Liechtenstein’s Blockchain Act, one of the most advanced regulatory regimes for the industry in the world – one that balances support for innovation with importance advances in customer and asset protection,” he said.
“Where Liechtenstein is leading, others are set to eventually follow. And this will mark the shift of the blockchain, and specifically cryptocurrency, market from an unregulated one which has attracted a justifiably poor reputation in some corners, to the kind of regulated industry that can provide a stable home for investor capital.”
And finally, there is the evolving role of major organisations – from governments to big tech – in cryptocurrency.
“2019 has been a year in which institutional involvement in blockchain has started to grow. We are seeing a combination of opportunism and caution, with the industry under growing political scrutiny,” said Raj.
This year we have seen questions raised – is big tech the right vehicle for cryptocurrency, how can governments best regulate an emerging industry, what will the role of central banks be? In 2020, we can expect more answers, and greater clarity about how state and corporate institutions intend to approach both the opportunities and challenges of the token economy and blockchain technology.”