Researchers See Bitcoin Toppling Fiat In Ten Years
A new study released by joint researchers from Imperial College London as well as trading platform eToro predicts the dominance of digital currencies. While some commentators have noted that academics are notoriously poor at predicting the future, the addition of the commercial entity of eToro bolsters their forecast.
Bitcoin and the other altcoins are predicted to be the “next step” for money, and are closer to mainstreaming than many realize. The researchers looked at three principal determinants in assessing digital currencies. The criteria considered a virtual coin’s ability to be a store of value, its performance as a unit of account and its application as a medium of exchange. The report notes that bitcoin and several other prominent cryptocurrencies already serve those purposes, with users’ current employment of the coin as a store of value the most pronounced.
Imagining bitcoin as a default form of payment within the next decade or less, the report comes as a breath of fresh air for many enthusiasts. The realities of decentralization are starting to filter down through established fintech institutions, and recent comments from those in power have pointed to the fact that many have no intention of even taking bitcoin seriously. Even celebrity investor Warren Buffett is on record saying that Bitcoin is a bubble that must eventually pop.
An Academic Appraisal Of Bitcoin
Researchers drew their criteria from the intrinsic roles of traditional fiat currency, measuring how closely cryptocurrency came to emulating them. The report presents as unbiased, acknowledging Bitcoin’s obvious shortcomings as it stands in today’s marketplace. The paper further acknowledges that the virtual currency is wholly skewed as a speculative tool, and that in-house issues like scalability and external forces like regulation will have to be weathered for it to perform so capably in the other two categories.
Professor William Knottenbelt from Imperial noted that the industry is “evolving as rapidly as the considerable collection of confusing terminology that accompanies it.” If scalability and adoption issues are successfully negotiated, Knottenbelt said that he felt digital coins will become a “viable technological update” on the way people spend money. He additionally commented that decentralized technologies “have the potential to upend everything we thought we knew about the nature of financial systems and financial assets.”
Contrary to frequent scepticism over whether crypto projects really have it in them to be true world money, the researchers worked through a body of evidence depicting otherwise. Although easy to diminish when quoting global statistics, the fact remains that cryptocurrencies “have made significant headway towards fulfilling the criteria for becoming a widely accepted method of payment,” Knottenbelt said.
Fellow researcher and colleague Dr Zeynep Gurguc added that those who felt such a shift impossible should remember that – in our lifetimes – humanity has seen just such a shift from cash notes to digitized credit. He said that new payment systems or asset classes won’t typically emerge in a flash, but rather take years or even a decade or two to mainstream. On this count, Bitcoin is then no exception.
Although cognizant of the limitations, the research concludes that true, large shifts in payment protocols happen when UX is vastly improved. When the commonality of each shift is seen to be enhanced user ease, Bitcoin has every right to lay claim to being the logical next step in money.
One Simple Question
At a time of recent dark commentary – most notably from the Bank of International Settlements (BIS) chief Augustin Carstens – the research has re-enthused many users looking for some good news. In spite of terminal predictions and even insistence from some powerful quarters, the question remains: how would vested interests derail Bitcoin and bury it for good? Can millions of global users ever be prevented from exchanging their virtual coins? That seems incredibly unlikely and is a point the research barely considers.
With that said, the exact nature of the looming tussle between fiat and its masters and the digitized currency world remains hard to predict. It’s equally unlikely that fiat will simply roll over into second place. Doomsayers like Buffett and Carstens are intermittent, but their hard nose stance and clear contempt for cryptos is reason for concern.
The research highlighted a classic use case for Bitcoin and a demonstration of its superiority by pointing to cross-border payments. Researchers noted that Bitcoin was intrinsically borderless, and that many previously costly issues when employing fiat evaporate with cryptocurrencies. The bitcoin price is recovering from an eight-month low and trading at $6718.78, although many prominent voices are still short, predicting that the coin might dip further before correcting.