World Economic Forum identifies 4 factors driving global interest in crypto: report

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The World Economic Forum (WEF) says there are four main factors that are triggering a tidal wave of crypto adoption across the world.

In a new report, the independent international organization says interest in cryptocurrencies is increasing due to a combination of economic factors.

“Central bank policies, hyperinflation and macroeconomic instability resulted in volatility and devaluation of local fiat currencies against other global currencies before and in particular during the COVID-19 pandemic. This has caused individuals and companies such as Microstrategy, Tesla, and Square to hold bitcoin and other digital funds. It has also inspired increased advocacy from users and awareness among policymakers from the United States to El Salvador who are shaping new policies around cryptocurrencies. “

The WEF also notes that the costs of remittances consume a higher percentage of transactions than ideal, which potentially explains the growing attention to P2P (peer-to-peer) systems found in many cryptos.

Another factor that is generating interest in crypto assets is the rapid creation and scaling of stablecoins as a much more efficient medium of exchange.

“The market capitalization of the USD Coin (USDC), for example, has exceeded $ 25 billion with a compound annual growth rate of over 6,100%. Such traction even inspired Sweden to pivot its electronic crown project to compete with these cryptocurrencies and central bank digital currencies (CBDCs).

Finally, the WEF highlights the wide range of different applications provided by various digital assets, along with an effort to become greener and consume less energy is leading people to turn to crypto markets.

“Such improvements also boost the use of DeFi (decentralized finance) applications. The rapid proliferation and maturation of these innovations is largely due to the open source architecture and global developer communities that underpin crypto networks.

The WEF also claims that cryptocurrencies do not allow illicit financial activity while providing a chance to create a more transparent economic system.

“Regulators have highlighted the pseudonymous and borderless nature of cryptocurrency systems as potential money laundering and terrorist financing risks. Yet illicit activity is significantly lower than that of the traditional financial system, accounting for just 0.34% of all cryptocurrency transactions.

Cryptocurrencies can enable transparency and provide an opportunity for regulators who are actively seeking to move more transactions from the informal economy to the formal economy. “

You can read the full World Economic Forum report by Alpen Sheth here.

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