The following report is by Decrypt:
In its latest report “Money, Tokens, and Games: Blockchain’s Next Billion Users and Trillions in Value,” Citi analysts suggest that the next influx of crypto adoption will be powered primarily by the rise of central bank digital currencies (CBDCs) and the tokenization of real-world assets.
CBDCs are alternatives to cryptocurrencies like Bitcoin or Ethereum. Based on current trials, CBDCs would be pegged to a fiat currency, be it the dollar or the pound, but exist digitally and be controlled by the issuing currency’s central bank, such as the Fed or the Central Bank of England.
SEE: Red Alert: Federal Reserve Set To Launch “FedNow” Digital Payment System To Usher In CBDC
During a panel event today during the Citi Digital Money Symposium, which coincided with the report’s release, the bank’s future of finance lead Ronit Ghose suggested that there will be $5 trillion circulating in the economy in CBDCs “by the end of this decade.”
Still, he did add the caveat that “most of it will not be blockchain-based, but some of it will have blockchain interoperability or be DLT-specific.” DLT refers to distributed ledger technology, which does not necessarily include using a blockchain.
This swift adoption would be due to the myriad advantages, per the report, including an interoperable payment instrument and general enthusiasm from developing economies.
Still, there are nonetheless clear risks, notably protecting user privacy and users pulling deposits from smaller, commercial banks to move over to a CBDC.
Citi Turns To Tokenization
Another key driver behind mass crypto adoption will be tokenization, or bringing traditional financial assets onto the blockchain.
Citi said it “could be the killer use case” for blockchain technologies, estimating that tokenization could “grow by a factor of 80x in private markets and reach up to almost $4 trillion in value by 2030.”
Efficiencies cited include disintermediation within financial markets, composability with cryptocurrencies, and ultimately a “shared ‘golden-source’ infrastructure” upon which different asset classes could exist on the same network.
Naturally, there are clear roadblocks on the way to this “golden” standard.
Regulatory clarity is perhaps the largest, with few jurisdictions offering a clear framework for adopting traditional assets on-chain.
There may also be pushback from those in the financial industry, reports Citi, as the disintermediation such technologies offer could render their jobs obsolete.
AUTHOR COMMENTARY
I have not really talked about it much, but, contrary to most voices out there right now, I see cryptos and NFTs seeing a massive resurgence coming up, and Citi appears to be thinking the same thing.
As more and more people and nations are looking to dump the dollar that has lost roughly 98% of its purchasing power, and as CBDCs are on the way, money and investments are going to look for new places to go to, and many are going to put them in cryptos and digital assets. Therefore, if this actually happens, this could be a goldmine for investors and those looking to capitalize (this is not financial advice by the way).
Furthermore, if what Citi is saying carries some water, then they this may indicate that cryptos might not get vaporized and destroyed completely. Regulation is coming regardless, but it sounds like they could possibly still exist in concert with the CBDCs, with the CBDC and central bank orchestrating it all. Time will tell if this is another “rope a dope” situation.
[7] Who goeth a warfare any time at his own charges? who planteth a vineyard, and eateth not of the fruit thereof? or who feedeth a flock, and eateth not of the milk of the flock? [8] Say I these things as a man? or saith not the law the same also? [9] For it is written in the law of Moses, Thou shalt not muzzle the mouth of the ox that treadeth out the corn. Doth God take care for oxen? [10] Or saith he it altogether for our sakes? For our sakes, no doubt, this is written: that he that ploweth should plow in hope; and that he that thresheth in hope should be partaker of his hope. (1 Corinthians 9:7-10).
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