Deutsche Bank dares long-term forecast for Bitcoin & Co.

Even though 2019 was marked by clear recovery tendencies in the cryptomarket, Bitcoin & Co. have not yet been able to really make their way into everyday life this year either. Currently BTC is mostly used for trading, betting on sports (read more at or anonymous payments. However, Germany’s largest financial house believes that this will change significantly in the next ten years.

In a study entitled “Imagine 2030”, Jim Reid, an analyst at Deutsche Bank, gave a quite surprising outlook on the development of crypto-currencies like Bitcoin in the coming decade.

Fiat system at the end?

In his report, the expert pointed out that cryptocurrencies have already presented the established Fiat system with major challenges in recent years. In about ten years – until 2030 – digital coins have the potential to provide a changing of the guard at the top and to overtake the current financial system. Bitcoin, Ethereum, Ripple & Co. could replace fiat currencies, says Reid.

In particular, the expert pointed out that the demand for e-materialised means of payment and anonymity will lead more and more people towards crypto-currencies. Reid highlighted inflation and the rise in the price of gold since the 1970s following the end of the gold-backed monetary system.

“Crypto-currencies have so far been an addition rather than a replacement to the global monetary system,” Reid continued in the study. Despite their well-known advantages such as speed, minimal transaction fees, easy storage and relevance in the digital age, digital currencies have not yet managed to establish themselves as a means of payment. “But that could change in the future,” says the Deutsche Bank strategist.

“That the current Fiat system has survived for so long required a random series of global forces over decades that have created significant natural, compensatory, disinflationary forces,” the strategist writes in his report.

Cryptosystem still has challenges to overcome

  1. Before that, however, digital assets would still face hurdles that would have to be overcome. First, they must achieve a legitimate status in the eyes of governments and regulators.
  2. This would bring price stability and also ensure global reach in the payments market.
  3. In fact, volatility is a major reason why many consumers – and potential institutional investors – are sceptical about currencies like Bitcoin.

In order to achieve reach, service providers such as Apple Pay and Google Pay, credit card providers such as Visa and MasterCard, and merchants such as Amazon and WalMart need to be brought on board. But if these hurdles could be overcome, the future of the Fiat system would be in jeopardy, Reid believes. At the same time, however, new challenges will arise when crypto currencies enter the mainstream. In his report, the Deutsche Bank expert mentions, among other things, dependence on electricity, cyber attacks and a digital war as potential threats to a financial system based on crypto-currencies. In this case, the expert warns, “the line between crypto-currencies, financial institutions and the public and private sectors could become blurred.

Crypto does not necessarily mean Bitcoin

In a possible rise of digital currencies, however, Reid does not necessarily see the current largest crypto currency, Bitcoin, at the top. “Looking ahead to the next decade, it wouldn’t be surprising if a new and common crypto currency were to emerge unexpectedly,” he says.