Cryptocurrencies have the Potential to Revolutionize Payment Standard – Deutsche Bank Report

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Deutsche Bank has released yet another report focused on forecasting the trends in cash, mobile, blockchain, and cryptocurrencies.

The first part is called “Part I. Cash: the Dinosaur Will Survive … For Now,” of the three-part series called “The Future of Payments,” which as the title suggests predicts that cash will be part of the economy of the decades to come.

It states how governments, banks, and card providers have the common goal of eliminating the cash as large notes are “mostly used for the black market.” The $100 Bills are “mainly used for illegal activities such as tax evasion, drug trafficking, and terrorism,” and estimately two thirds of these notes are held outside the United States.

Cash is not a dinosaur that is doomed to extinction yet

Cash however is still here to stay because people have a deep-rooted trust in it during uncertain times.

The Bank also surveyed 3,600 customers across the US, UK, China, Germany, France and Italy who says their preference is still cash because it is faster to pay, easier to monitor their spending, and is accepted almost everywhere.

Apart from keeping the purchases anonymous, it is a secure method that avoids cyber attacks on people’s money.

But while cash is not a dinosaur that is doomed to extinction yet, we have been experiencing a century of innovative disruptions as well.

China’s Digital Yuan will “Certainly Erode the Dollar’s Primacy”

Deutsche Bank says digital payments will grow at “light speed” causing the plastic cards to extinct. It noted that mobile payments deployment has facilitated financial services to unbanked or underbanked citizens.

Over the next five years, they are further expected to quadruple whose effects are expected to arrive sooner in the emerging markets.

Also, “as China (and India) develop electronic, crypto, and peer-to-peer strategies, the epicentre of global economic power could shift.”

The world’s two most populous countries — China and India the report says are escalating the push to remove cash and encouraging the use of digital currencies.

China working on a central bank-backed digital currency (CBDC) the bank said could be used as “a soft- or hard-power tool.”

“In fact, if companies doing business in China are forced to adopt a digital yuan, it will certainly erode the dollar’s primacy in the global financial market.”

Blockchain Wallet Users “Mirror” the Internet Users

When it comes out cryptocurrencies like Bitcoin and Facebook’s Libra, they have encountered significant regulatory hurdles but despite that blockchain wallet users continue to “mirror” the Internet users.

The German multinational Investment bank says these wallets are expected to quadruple in number by the end of the decade. Moreover, they will be encouraged by banks, corporates, payment providers, and governments as well.

The report talks in detail about the most famous cryptocurrency Bitcoin, a highly volatile currency. To minimize the fluctuations, it notes fiat-backed stablecoins have been embraced whose stabilization requires some kind of centralized infrastructure.

Cryptocurrencies, however, are still in the early adoption stage. But “we should expect further experimentation to take place in the context of a rapidly digitising society and a post-financial-crisis environment,” said the bank.

When it comes to crypto adoption, stores have started accepting digital currencies as a payment method. Although the number is still small, the growth trend is noticeable among retailers like Newegg and AT&T and online travel booking platforms.

The bank observes that payments made by BTC have also “taken off” but they are still a “tiny fraction” of global payments.

“Nevertheless, cryptocurrencies have the potential to revolutionise payment standards,” Deutsche Bank said.

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