Crypto is approaching a "point of inflection," say analysts at Citi, pointing to the rise of tokenization and CBDCs around the world.
Panelists
discussing the rise of crypto at the Citi Digital Money Symposium. Image:
Decrypt.
Citi
says the industry is finally "approaching an inflection point" and
that blockchain technology will soon see "billions of users and trillions
of dollars in value."
In its latest
report "Money, Tokens, and Games: Blockchain's Next Billion Users and
Trillions in Value," Citi analysts suggest that the next influx of crypto
adoption will be powered primarily by the rise of central bank digital
currencies (CBDCs) and the tokenization of real-world assets.
CBDCs are alternatives to
cryptocurrencies like Bitcoin or Ethereum.
Based on current trials, CBDCs would be pegged to a fiat currency, be it the dollar or the pound, but exist digitally and be controlled by the
issuing currency's central bank, such as the Fed or the Central Bank of
England.
During a panel
event today during the Citi Digital Money Symposium, which coincided with the
report's release, the bank's future of finance lead Ronit Ghose suggested that there will be $5
trillion circulating in the economy in CBDCs "by the end of this
decade."
Still, he did
add the caveat that "most of it will not be blockchain-based, but some of
it will have blockchain interoperability or be DLT-specific." DLT refers
to distributed ledger technology, which does not necessarily include using a
blockchain.
This swift
adoption would be due to the myriad advantages, per the report, including an
interoperable payment instrument and general enthusiasm from developing
economies.
Still, there
are nonetheless clear risks, notably protecting user privacy and users pulling
deposits from smaller, commercial banks to move over to a CBDC.