Cryptocurrencies may become mainstream form of payment within a decade: report
Digital currencies must fulfil six challenges; scalability, usability, regulation, volatility, incentives and privacy.
Cryptocurrencies have often been touted as the future of money. However, given their continued proliferation, volatility, security and privacy issues and regulatory barriers, mainstream adoption has yet to transpire.
A new research report released by global trading giant eToro and Imperial College London suggests currency has evolved significantly over time and that digital currencies already fulfill one of three major criteria to be considered as money and that the widespread use of such tokens is a natural next step in the process.
The report, Cryptocurrencies: Overcoming Barriers to Trust and Adoption was carried out by Professor William Knottenbelt from Imperial College London and Dr. Zeynep Gurguc from Imperial College Business School.
The research suggests that cryptocurrencies may become a form of mainstream payment by 2028.
Their findings advocate that cryptocurrencies are already a store of value, meaning that they allow individuals to make choices on when to utilize their purchasing power. The two other deciding factors of a potential currency are the ability to be a medium of exchange and a unit of account – a measure of value in the economy.
In order to meet these requirements, digital currencies – such as bitcoin – must fulfil six impending challenges; scalability, usability, regulation, volatility, incentives and privacy.
Cryptocurrencies offer a viable evolutionary ‘next step’ for money and have the potential to become a mainstream form of payment within the next decade.
Extract from Cryptocurrencies: Overcoming Barriers to Trust and Adoption
The report points out that all new forms of money have rendered older ones obsolete. For example, barter and objects of value such as cowrie shells were eventually replaced by coins, notes and plastic payment cards.
The research also notes that each evolutionary stage of money has brought about a reduction in payments friction. Today, contactless and electronic, mobile payments are the primary ways in which we spend money.
“The world of cryptocurrency is evolving as rapidly as the considerable collection of confusing terminology that accompanies it. These decentralized technologies have the potential to upend everything we thought we knew about the nature of financial systems and financial assets,” Imperial Professor William Knottenbelt said.
“There’s a lot of scepticism over cryptocurrencies and how they could ever become a day-to-day payment system used by the man on the street. In this research we show that cryptocurrencies have already made significant headway towards fulfilling the criteria for becoming a widely accepted method of payment.”
The report identified cross-border payments as a viable tipping point to push cryptocurrencies mainstream. Remittance is often heralded as difficult and expensive but digital currencies are combating these trends.
For example, Ripple has signed over 100 partners who utilize the RippleNet blockchain to process real-time payment solutions for customers. Companies include UAE Exchange and Chinese payment provider LianLian.
You can learn all about different exchanges, understand exactly how to buy and sell cryptocurrencies, calculate your taxes, discover digital wallets to hold assets and explore a list of all the alternative coins on the market.
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