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In a Citibank report that concludes Bitcoin as “the tipping point of its existence” it is anticipated that Bitcoin could become “an international trade currency”.
In a report produced by the bank’s thought leadership arm, Citi Global Perspectives and Solutions (GPS), a bright future for Bitcoin is anticipated considering the recent adoption of large institutional investors and growing regulatory groundwork. The report states:
“Perceptions about what makes Bitcoin important continue to evolve and create new opportunities while increasing its perception towards becoming mainstream.”
The authors of the report forecast that Bitcoin’s core properties together with its global reach and neutrality could see it become the “currency of choice” for international trade in around seven years.
The report further states:
“A focus on global reach and neutrality could see bitcoin become an international trade currency. This would take advantage of Bitcoin’s decentralized and borderless design, its lack of foreign exchange exposure, its speed and cost advantage in moving money, the security of its payments, and its traceability.”
The report shows that international trade can drastically be simplified as goods and services can be paid for directly and a decentralized cryptocurrency such as Bitcoin can proof to be preferred to a Central Bank Digital Currency as it excludes government or monetary intervention:
“No government or outside entity can take steps that might affect the supply of the trade currency, helping to decouple trade from political considerations.”
The report also acknowledges some barriers and while institutional investors are looking forward to press the button in favor of cryptocurrency, it is stated that:
“The entrance of institutional investors has sparked confidence in cryptocurrency but there are still persistent issues that could limit widespread adoption,”
“For institutional investors, these include concerns over capital efficiency, insurance and custody, security, and ESG considerations from bitcoin mining.”
Another concern is on scalability, with the report pointing to 2020 analysis which suggests that Bitcoin can handle on average 5 transactions per second – which is almost 5,00 times slower than the Visa network’s capacity.
One must not forget that in the case of cryptocurrency transactions, we are still in the early years of development and therefore in its infancy. We all remember how the Internet started and where it is now. Global adoption spurred its technology and innovations.