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November 29, 2023
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Cryptocurrency And Cash Will Coexist, Predicts Deutsche Bank Research Paper

It is impossible to overlook the $2 trillion crypto economy, both for the general public and expert like Marion Laboure, senior economist at Deutsche Bank Research.

She shared valuable insights on the potential of two important cryptocurrencies – Bitcoin and Ethereum — In a recent interview that was published on the website of Deutsche Bank. In the interview, she talked about how cryptocurrencies would shape the future payments worldwide.

Laboure stated that while Bitcoin and Ethereum are accepted in many shops, they are not yet a common form of payment due to the long transaction times and high transaction fees.

Bitcoin takes 10 minutes for a transaction to be validated. There is currently a $20 transaction fee, which makes it less popular.

Laboure was asked to explain Bitcoin’s dissimilarities from dollars or other fiat currencies. He said that Bitcoin and other cryptocurrencies were not backed by the governments, which means people aren’t legally bound to accept them as payment.

She believes that Bitcoin could become the 21st century’s gold. Bitcoin, like gold, has deflationary characteristics. It isn’t widely used as a means of payment, and it is highly volatile.

It will become more mercurial over the next few years, she believes.

  • Approximately, 66% of Bitcoins can be used for speculation and investments.
  • Bitcoin’s limited tradability means that only the rare large transactions or market closures will affect its supply-demand equation.
  • The attitude and approach of crypto enthusiasts and investors can greatly influence the price of Bitcoin.

Laboure believes that Bitcoin’s high price and limited supply of 21 million coins make it a popular hedge against inflation.

Ethereum Is Digital Silver And Bitcoin Is Digital Gold

Bitcoin is the most popular cryptocurrency and has mainstream institutional support. It was the first to be launched cryptocurrency.

Ethereum, the first runner-up, leads the market in many ways because it has many practical uses in the blockchain industry, especially in DeFi platforms and NFT platforms.

Laboure regards Ethereum as digital gold for its distinct application-based capabilities. According to Forbes, however, other cryptocurrencies like Polkadot and Solana as well as Binance and Cardano could challenge Ethereum with smart contracts.

Main Drawbacks Of Cryptocurrency

Laboure identifies the following two issues that are most relevant to cryptocurrencies:

  • Crypto trading is not regulated, which discourages investors from entering the market. However, it can be profitable and attractive for individuals.
  • Crypto mining leaves a huge carbon footprint and is very concerning for the environment.

She expressed optimism about the future technological advancements that will help usher in a crypto-friendly market. According to Deutsche Bank analysts, many countries will have strong crypto regulatory systems by 2022.

Can CBDCs, Cryptocurrency And Cash Coexist?

CBDCs are digital fiat currencies that are completely centralized. They are different from cryptos which are decentralized and give each user access to the transaction log.

Laboure says that CBDC, crypto and cash will coexist, and not one will replace the other. Over the past three years, governments all over the globe have been strongly advocating the use of digital payment options.

With the enforcement of CBDCs, cryptocurrencies and an increase in cash payments, cash payments could actually decrease. India is also working to enforce a cryptocurrency regulatory framework. It is planning to launch the pilot project for its CBDC soon.

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