Banking giant Deutsche Bank has recently published its outlook for the decade ahead – the ‘Imagine 2030’ report – highlighting the dangers of the forces holding the fiat money system unravelling in the next decade, thus fostering the demand for crypto.
According the recent research report from Deutsche Bank, by 2030, the demand for alternative currencies will rise, with digital currencies eventually replacing fiat money.
Deutsche Bank strategist Jim Reid raised awareness, in the recent report, of the challenges the existing fiat system has encountered in recent years, specifically with the emergence of cryptocurrencies. He further claimed that people’s heightened demand for dematerialized means of payment and anonymity could lead to more individuals switching to digital currencies.
According to data provided by the banking giant, nearly two thirds of consumers prefer dematerialized to cash payments and a third are concerned about anonymity, two things unique to digital currencies.
Whilst digital currencies may not have gained as much traction as a means of payment despite their well-known benefits, such as security, speed, minimal transaction fees, ease of storage and relevance in the digital era, this may change in the next decade.
In the meantime, the researcher report noted that cryptocurrencies need to overcome three main hurdles in order to gain wider acceptance. Firstly, digital currencies must become legitimate in the eyes of governments and regulators, which requires bringing stability to the price as well as advantages to both consumers and merchants.
Secondly, cryptocurrencies must allow for global reach in the payment market. According to the report, this could be achieved by forging alliances with key stakeholders. For instance, mobile apps such as Apple Pay, Google Pay, card providers such as Visa and Mastercard, and retailers, such as Amazon and Walmart.
Last but not least, to realize a smooth transition to a fully digitalized platform, the financial system needs to be ready to overcome any kind of electricity shutdown or cyberattack. These are challenges that may arise with mainstream adoption and Reid pointed out that “as that occurs, the line between cryptocurrencies, financial institutions, and public and private sectors may become blurred.”
Deutsche Bank further noted in its research report how prone to inflation and unstable fiat money could be, further suggesting the possibility that inflation could become more embedded in our system and doubts will rise about the sustainability of fiat money.
“Politically it is always too tempting to create money when nothing is backing it. That this current fiat system has survived so long has required a fortuitous set of global forces across multiple decades that have created sizeable natural offsetting disinflationary forces,” they said.
Researchers estimate that by 2030 there could be 200m blockchain wallet users and digital currencies might eventually replace cash , granted that governments back cryptocurrencies, and consumers want them, and if current trends continue.
However, currently, political support remains far from clear. Buying and selling cryptocurrency in countries like China and India is still banned, with the former adopting a singularly hard stance of late.