Research from financial services giant Deutsche Bank argues that non-sovereign cryptocurrencies “pose a threat to political and financial stability” as a “real digital payment revolution” has been underway for the past decade.
In the first part of three in its “The Future of Payments” reports, the Germany-headquartered financial institution revealed it doesn’t believe cryptocurrencies are going to replace cash any time soon, even though they have “passed the tipping point needed to become fashionable.”
Deutsche Banks’ report claims cryptocurrencies are still in an early adoption phase, but pose a threat given the current changes cash is undergoing. While the report says it’s “unlikely to disappear anytime soon,” it notes it’s losing ground as a payment method as several countries removed large notes from circulation and “implemented policies to replace traditional payment methods with digital solutions.”
The report adds:
In the midst of these changes, non-sovereign cryptocurrencies pose a threat to political and financial stability.
The financial institution’s report also added that cryptocurrencies like bitcoin are “too volatile” to be a “reliable” store of value, given the significant price fluctuations they went through between 2017 and 2018. Bitcoin itself, for example, went from $1,000 in early 2017 to a near $20,000 all-time high by December 2017, only to then drop to a $3,200 low seen in December 2018.
Since then the cryptocurrency has been recovering, as according to CryptoCompare data it’s now trading at $8,780. The institution’s researchers added that BTC payment still represent a fraction of global payments, although payments in cryptocurrency have taken off.
As CryptoGlobe covered, data suggests a total of $2.5 trillion worth of BTC were transacted on the Bitcoin network in 2019, with the average transaction value being of 2.75 BTC, or $23,000. In comparison, Visa’s network reported a total transaction volume of $11 trillion in 2018. Deutsche Bank, nevertheless, showed it believes cryptocurrencies have the potential to “revolutionize” payments, although it may not be BTC itself.
Looking ahead, it may not be surprising if a new and mainstream cryptocurrency were to unexpectedly emerge.
In June of last year, the bank argued that rate cuts from the Federal Reserve were likely going to give bitcoin a boost, as global growth was slowing down as a result of falling business confidence.
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