At the start of the decade, banks were some of the biggest skeptics about cryptocurrencies. However, as we near the start of the 2020s, banks seem to be heading into a more mature understanding of the cryptoassets that many of us know and covet. Banks are bullish on crypto, and it could change everything.
Some of the biggest banks in the world initially outed themselves as cryptocurrency skeptics. In 2017, Jamie Dimon, CEO of JPMorgan Chase, said that Bitcoin was a “fraud” and that any employee found to be trading it would be fired for being “stupid”. Even as late as April 2018, Deutsche Bank called for a regulatory crackdown on cryptocurrencies, arguing that assets like Bitcoin can lead to an increase in fraud and cybercrime.
Both Dimon and Deutsche Bank have had a change of heart since then. Dimon announced that he now recognizes blockchain’s potential influence on the future of global financial systems, and JPMorgan have released their own blockchain, Quorum.
Deutsche Bank released their Imagine 2030 report, which outlines predictions from top bank officials for the decade ahead. In this report, Deutsche Bank officials make the case for mass adoption of top cryptoassets, like Bitcoin, by 2030.
What’s in the report?
The Imagine 2030 report states that digital assets “have not managed to take off as a means of payment despite their well-known benefits, such as security, speed, minimal transaction fees, ease of storage and relevance in the digital era.” They go on to outline how this can be overcome, as regulatory hurdles from banks, financial service providers, and governments are eliminated by the common goal to get cryptocurrency to go mainstream.
According to the report, led by Jim Reid, Head of Fundamental Credit Strategy and Thematic Research, “If one of the GAFA [Google, Apple, Facebook and Amazon] (or their Chinese counterparts BATX [Baidu, Alibaba, Tencent and Xiaomi]) for example are able to overcome regulatory hurdles… this would broaden the appeal of cryptocurrencies, hasten their adoption, and give them the potential to eventually replace cash,”
The current global financial system is broken. There’s no denying that. According to the Imagine 2030 report, the system is “fragile” because of “decades of low labor costs” and inflation. Over the next 10 years, things will likely change - the current fiat system is unsustainable for working and middle class people, and “demand for alternative currencies, from gold to crypto, could take off.”
According to Deutsche Bank, there are three main obstacles that will need to be overcome in order for crypto to go mainstream:
- Cryptocurrencies will need to “become legitimate in the eyes of governments and regulators.’’
- The second hurdle would be to bring “stability to the price, and bring[ing] advantages to both merchants and consumers.” Cryptoassets are volatile, so naturally this would be outlined in the report.
- The third hurdle must “allow for global reach in the payment market,” so, ““alliances must be forged with key stakeholders – mobile apps such as Apple Pay, Google Pay, card providers such as Visa and Mastercard, and retailers, such as Amazon and Walmart.”
However, Deutsche Bank also admits that these “solutions” open up new issues, that could lead to cyberattacks, other digital security concerns, and “basing a robust financial system entirely on electricity consumption,” (cryptoassets aren’t exactly environmentally friendly - check this out.)
The report goes onto cite growing privacy concerns as a reason that cryptoassets could become the “21st-century cash”. “Nearly two thirds of consumers prefer dematerialised to cash payments and a third are concerned by anonymity. These are the two things that cryptocurrencies do best,” the report states. Although there are coins that are total privacy coins, Bitcoin and Ethereum (the two largest coins by market cap), don’t fall into that category.
Banks are bullish on crypto, so now’s the time to get into the market. Whether you want to buy Deutsche Bank stocks or Bitcoin, get your foot in the door with the world’s largest social trading platform, eToro.
Mass adoption in the 2020s?
Banks are bullish on crypto, and that’s good for the industry. As we close off the decade, we’re still nowhere near mass adoption. However, with many banks, governments, and regulatory bodies seemingly warming up to the idea of cryptoassets, we could be in for a very good run in the 2020s. Deutsche Bank’s Imagine 2030 report is really only a small taste of what’s to come.