Article from John Mckilly, editor in bitnewsbot.com
Cash of the 21st century characterizes cryptocurrencies the investment bank. Where the existing monetary systems and the main obstacles to the acceptance of the digital economy are fit.
One by one, the castles are falling. Deutsche Bank (DB), the largest German bank, published an 84-page report a few days ago.
In this report, they expose their views to 24 issues that they believe we should be prepared for, as they are likely to determine our lives in the next decade. And one of them was what? The cryptocurrencies. The cash of the 21st century, as they say.
But before we get to page 58 – the chapter analyzing the issue of Crypto- in the first chapter, there is a reflection that we have mentioned several times: that there is evidence that the era of fiat currencies is on its way to the end. We call Fiat the forced circulation money as the payment instrument which has not overdrawn in reserve other materials such as gold and therefore lacks internal value, albeit indirectly
The current system now seems fragile. Its viability is questioned; they acknowledge in this DB study. On the one hand, there is a need for higher interest rates, on the other, the global debt is now so large that the increase in interest rates will lead to wage reductions, increases in taxation, unrest, bankruptcy. If we are close to the end of the traditional monetary system, so at least in the form we know it today, alternatives should be sought. What are they going to be? Gold or cryptocurrencies! (The report mentions it, do not think it is our addition).
The factors leading to the emergence of cryptocurrencies are increasing. The environment favours the development of digital payments, as governments and banks aim to eliminate cash. They have already begun to withdraw the largest in value banknotes, because they are considered to be used mainly for the black economy.
Cryptocurrencies and their decentralised operating framework attract first of all those who are disturbed by the excessive control by governments and bank charges. For the time being, Cryptocurrencies are considered a supplementary payment instrument, not a substitute for the money we know. But as far as the future is concerned, this situation can easily be overturned.
The developments are moving fast. Chinese president Xi Jinping recently acknowledged that blockchain is “a major achievement” and reiterated the intention of China’s Central Bank to replace cash with a digital currency based on this technology. The aim is to support the movement and internationalisation of yuan.
One question is how quickly entrepreneurs and consumers will embrace change, which as the story has shown only self-evident is not. In the 20th century, most companies preferred cash. Today, the image has changed. They prefer digital payments, despite the cost of purchasing the cards.
As for the future of the crypto, DB’s research points out that three main obstacles have been faced in order to achieve a decent rate of acceptance
- First, they must be legalized in the eyes of governments and regulators. This means stabilizing the price and having advantages for both traders and consumers. This takes time, given the suspicion that they are being used for illegal activities and money laundering.
- Second, there is the question of global scope in the area of payments. In order to be addressed, alliances should be forged with key stakeholders and mobile applications such as Apple Pay and Google Pay, card companies such as Visa and Mastercard.
- Third, of course, is the cyber-attacks and the secure storage of data issue. Reported the example of Estonia, which has opted for Luxembourg to store a full copy of government data, including details of citizens ‘ health, population, business registers, etc.
Electricity dependence is another problem. Rare incidents like the 1989 may occur when Quebec sank in the dark for nine hours due to solar luminescence.
Perhaps the most interesting point of the survey is the comparison it makes for the rate of adoption of cryptocurrencies, in relation to the evolution of the Internet.
Compare Internet users with users of electronic wallet. They believe that once there is a similarity in the rate of acceptance and use, it makes sense to have a similar rate of evolution in the future (their prediction is the dashed line).
The reference to crypto ends with the following prediction: In the next decade, it will not be surprising if a new cryptocurrency is unexpectedly emerge.