4 Reasons to Believe Cryptocurrencies Are Here to Stay

https://finovate.com/4-reasons-to-believe-cryptocurrencies-are-here-to-stay/
http://finovate-wpengine.netdna-ssl.com/wp-content/uploads/2021/09/pexels-alesia-kozik-6771293.jpg?#

On the final day of FinovateFall a few weeks ago, I had the opportunity to talk with James Wallis, Vice President of RippleX, Central Bank Engagements, and CBDCs, on the topic of blockchain technology, cryptocurrencies, and the potential traction both are gaining within mainstream finance.

Wallis offers an unqualified “yes!” in response to the question of whether or not digital assets and the technology that makes them possible are gaining in popularity with financial institutions. Pressed for examples that support his conviction, Wallis had more than a few examples to share with our attendees. Below, we excerpted a few highlights from his remarks on where to look and what to watch for as the financial sector begins to shift from crypto-curious toward a potentially more enduring embrace of the technology.

Trade Finance

“Traction is being gained. It has been steadily growing over the past four or five years. A few examples, or proof points, particularly in the blockchain space: there are a number of trade finance initiatives around the world, different consortiums are live and running, facilitating trade finance with different blockchain platforms.”

“With RippleNet we have a global network for cross-border payments, which is blockchain based, and we use a native crypto, XRP, to facilitate cross-border payments in what we call ‘on-demand liquidity’.”


Tokenization

“We’re seeing lots of different assets being tokenized, whether that’s NFTs, or securities, whether it’s currencies … That, I think, is a big trend. I think the World Economic Forum has predicted that something like 10% of the world’s GDP will be tokenized by 2027. I think that equates to around $24 trillion of goods and assets being tokenized.”


Central Bank Digital Currencies (CBDCs)

“It’s a very busy environment right now. I think there’s a clear distinction between research and proof of concept versus building out real systems. Among the ones that are furthest ahead in building out real systems, China is probably the biggest one of scale. They are still in pilot mode; they are not fully operational. But they have had a number of pilots in different cities around China, and also are looking now to do some pilots cross border, as well. On the other end of the scale in terms of size, you have the Bahamas with their sand dollar, which is up and running.”

“Others that have done a lot of great research and are fairly well along but have not really pulled the trigger to go live yet are in Sweden with their digital e-krona and then, of course, Singapore with the Monetary Authority there. They have had a number of different projects over the last several years.”


Commercial bank interest rising

“I’ve seen personally a big uptick (in interest) in the last three or four months from commercial banks, household name banks wanting to understand more about what their role will be or could be in a CBDC. You know, when commercial banks start paying attention to something its because they’re either feeling there’s an opportunity to make more money or they feel there’s a threat against them.”

“A lot of early work was really wholesale: bank to bank transfers through central bank accounts. And that’s a valid use case. There’s been a trend in the last 12 months more towards retail, people looking at digital cash or other use cases around retail. Most of those, so far, have been domestic. In the Bahamas it’s really allowing people to send digital money to each other across the different islands there. But we are seeing an increase in interest, as is the Bank of International Settlements, in cross-border CBDCs: so how do you transact, say, with a digital U.S. dollar to a digital Euro to a digital yuan? I think use cases will just keep coming and coming, to be honest.”


Photo by Alesia Kozik from Pexels

https://finovate.com/4-reasons-to-believe-cryptocurrencies-are-here-to-stay/