According to Marion Laboure, a research analyst at Deutsche Bank, Bitcoin’s near $1 trillion feasible market valuation and potential for further growth have made it impossible for banks to continue ignoring its validity.
According to Laboure, a senior economist and market strategist at Deutsche Bank, people have always sought to store their wealth in assets that are not controlled by governments, such as gold. Bitcoin, on the other hand, has the potential to become the digital equivalent of gold.
“Gold has served in this capacity for centuries. And, yes, I believe Bitcoin has the potential to become the digital gold of the twenty-first century.”
She went on to say that many people see Bitcoin as a hedge against fiat inflation because it has a fixed supply at a time when central banks are exponentially expanding the supply of traditional currencies. Approximately 89 percent of Bitcoin is already in circulation, with a maximum supply of 21 million.
The significance of cryptocurrency in the future of payments
Laboure, a Harvard University finance and economics professor, believes that cryptocurrencies will help shape the future of payments. Currently, Bitcoin’s limitations as a payment method are primarily due to the small number of merchant outlets that accept it, its slow settlement time, and high transaction fees.
These factors, however, will change as adoption grows and technology improves, allowing for cheaper and faster transactions.
”However, it is important to remember that Bitcoin is risky: it is currently too volatile to be a reliable store of value. And I expect to be extremely volatile for the foreseeable future.”
According to Laboure, there are three primary reasons for Bitcoin’s volatility. The first reason is that Bitcoin is used for investing and speculative purposes. Second, despite increased adoption, Bitcoin still has limited tradability, which causes volatility in the market when a few large purchases or dumps occur. Finally, Bitcoin’s value is determined by what people believe it is worth, making it vulnerable to changes in investor sentiment.
Laboure also made a comparison between Bitcoin and Ethereum:
“If Bitcoin is sometimes referred to as “digital gold,” Ethereum is referred to as “digital silver.”
The most serious issue with cryptocurrency is a lack of regulation.
In the cryptocurrency industry, regulation has become a hot topic. According to Laboure, while lax regulation was beneficial to early adopters, it has now become a barrier to potential investments from businesses and institutional investors.
To process transactions, cryptocurrency also consumes enormous and unsustainable amounts of energy.
Both issues can be addressed by implementing greener crypto technology and stronger regulatory frameworks as early as 2021.
Contrary to popular belief, cryptocurrencies, central digital currencies, and cash will coexist in the future, according to Laboure.
“CBDC, cash, and cryptocurrency will all coexist. We do not expect cash to disappear, but we do expect it to decline as a means of payment.”