Citi Says Mass Crypto Adoption Will Be Driven by CBDCs and Tokenization

[ad_1]

Citi says the industry is “finally approaching an inflection point” and 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 surge in crypto adoption will be driven primarily by the rise of central bank digital currencies ( CBDC) and the tokenization of real-world assets.

CBDCs are alternatives to cryptocurrencies like Bitcoin or Ethereum. Based on ongoing trials, CBDCs would be pegged to a fiat currency, be it the dollar or the pound, but would exist digitally and be controlled by the central bank of the issuing currency, such as the Fed or Central Bank of India. England.

In a panel today at the Citi Digital Money Symposium, which coincided with the release of the report, Ronit Ghose, head of the bank’s financial future, suggested there will be $5 trillion circulating in the CBDC economy “by the end of this decade”.

Still, he added the caveat that “most of them will not be blockchain-based, but some of them will have blockchain interoperability or be DLT-specific.” DLT refers to distributed ledger technology, which does not necessarily include the use of a blockchain.

This rapid adoption is believed to be due to the myriad of benefits, according to the report, including an interoperable payment instrument and general enthusiasm from developing economies.

However, there are still obvious risks, including user privacy and users withdrawing deposits from smaller commercial banks to switch to a CBDC.

Citi turns to tokenization

Another key driver of mass crypto adoption will be tokenization, or the integration of traditional financial assets into the blockchain.

Citi said this “could be the deadliest use case” for blockchain technologies, estimating that tokenization could “grow 80-fold in private markets and reach nearly $4 trillion in value. here 2030″.

Cited efficiencies include disintermediation within financial markets, composability with cryptocurrencies, and ultimately a “shared” golden source “infrastructure” on which different asset classes could exist on the same network.

Naturally, there are clear roadblocks on the way to this “golden” standard.

Regulatory clarity is perhaps most important, with few jurisdictions providing a clear framework for the adoption of traditional on-chain assets.

Financial industry players might also be reluctant, Citi reports, because the disintermediation offered by these technologies could make their jobs obsolete.

Stay up to date with crypto news, get daily updates in your inbox.

[ad_2]