The present moment continues to be a fascinating and exciting time in the world of crypto, whether one is becoming a holder of cryptocurrency for the first time, or seeking out AML crypto services like those that TAG Consultancy can provide.
Indeed, it seems that crypto’s ultimate peak could be very much ahead of it. It interested us to read recently, for example, that analysts at Citi believe crypto is approaching a “point of inflection”, with blockchain soon set to see “billions of users and trillions of dollars in value”.
Crypto seems to be on the verge of a new wave of adoption
In a report entitled “Money, Tokens, and Games: Blockchain’s Next Billion Users and Trillions in Value”, the Citi analysts expressed their belief that the next influx of crypto adoption would be fuelled mainly by the rise of central bank digital currencies (CBDCs) and the tokenisation of real-world assets.
There has been much talk about CBDCs lately, which have been put forward as possible alternatives to cryptocurrencies such as Bitcoin and Ethereum. Ongoing trials indicate that CBDCs would – like cryptocurrencies – exist digitally, but unlike them, they would be pegged to a fiat currency such as the pound or dollar. They would also be under the control of the issuing currency’s central bank, such as the Bank of England or the Fed.
Coinciding with the release of the report, the Citi Digital Money Symposium hosted a panel event at which the future of finance lead at the bank – Ronit Ghose – suggested that “by the end of this decade”, there will be $5 trillion circulating in the economy in CBDCs.
He did, however, add that “most of it will not be blockchain-based, but some of it will have blockchain interoperability or be DLT-specific.” That “DLT”, of course, refers to Distributed Ledger Technology, which does not necessarily entail the use of a blockchain.
The Citi analysts’ report said that such rapid adoption would come about due to a range of advantages, including an interoperable payment mechanism and general enthusiasm from developing economies.
Looking to tokenisation, meanwhile – a term that refers to bringing traditional financial assets onto the blockchain – Citi said that this “could be the killer use case” for blockchain technologies. The bank estimated that tokenisation could “grow by a factor of 80X in private markets and reach up to almost $4 trillion in value by 2030.”
The institution cited various efficiencies, including composability with cryptocurrencies, disintermediation within financial markets, and ultimately a “shared ‘golden-source’ infrastructure” upon which different asset classes could exist on the same network.
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