The giant banking company Citi has produced a new report, suggesting that bitcoin could become an “international trade currency” as it evolves.
The report, entitled “Bitcoin: at the Tipping Point”, maps the evolution of the cryptocurrency: from a form of payment to its current value reserve status.It is more important for bitcoin to be a reserve of value or a payment system?
The authors predict that the essential properties of bitcoin, combined with global reach and neutrality, can make it the “chosen currency” for international trade in up to seven years.
“Perceptions of what makes bitcoin important continue to evolve and create new opportunities while increasing their awareness to become conventional,” says the report, adding:
A focus on global reach and neutrality can make bitcoin an international trade currency.
[Commerce] would benefit from bitcoin’s decentralized and limitless design, its lack of currency exposure, its speed and its cost advantage when moving money, the security of its payments and its traceability.
However, Citi researchers highlight several possible barriers that hinder this vision to materialize.
The report highlighted bitcoin’s scalability problems, highlighting the 2020 analysis, which suggests that bitcoin can process, on average, five transactions per second – which is 4,800 times less than the capacity of the Visa network.
The growing adherence of bitcoin by institutional investors has been a major driver for bitcoin over the past year, according to the report, but several risks can make adherence unfeasible.
For institutional investors, they include concerns about capital efficiency, insurance and custody, security and ESG [sustainability] considerations for bitcoin mining.
The report concludes that bitcoin is “at the turning point of its existence”, highlighting that its evolution will have wide repercussions.Tagged with: bank, bitcoin, business, citi,...