By
Bena Ilyas
April 18th, 2024
The latest report from Imperial College London shows cryptocurrencies are poised to be used as a mainstream financial payment method.
After a massive beating of the crypto market so far this year, cryptocurrency enthusiasts have some reason to look forward with optimism. In the past, many researchers have criticized the long-term potential of virtual digital currencies, but this time it’s the other way round.
In one of the latest academic study reports on Bitcoin and cryptocurrency, researchers at the Imperial College London have praised cryptocurrencies referring to them as a viable evolutionary ‘next step’ for money with the potential for mass adoption and entering the mainstream financial market in the next decade.
The report titled Cryptocurrencies: Overcoming Barriers to Trust and Adoption mentions that Bitcoin and other cryptocurrencies will be used as a means of daily payment mode for goods and services. Professor William Knottenbelt from Imperial College London and Dr. Zeynep Gurguc from Imperial College Business School argue that cryptocurrencies have the attributes to fulfill the three fundamental roles of traditional fiat currency. The three criteria for mass adoption as laid by the researchers include:
- Store of value: allowing individuals to make intemporal choices on when to spend their purchasing power;
- Medium of exchange: facilitating the exchange of goods and services by eliminating the inefficiencies associated with a barter economy;
- Unit of account: acting as a measure of value in the economic system.
The paper mentions that “meeting the last two criteria will require bitcoin and other cryptocurrencies to make progress on remaining challenges such as scalability, design and regulation.”
However, several experts from big financial institutions have argued since long that cryptocurrencies cannot be given a ‘currency’ status because of their speculative nature and extremely volatile behavior. Moreover, many experts have also said that the crypto technology is still far from handling mass payments like that of Visa and MasterCard. Ethereum co-founder Vitalik Buterin has several times talked about developing the Ethereum platform to a level where it can handle mass payments just like those two.
In this regard, Professor William Knottenbelt says:
“The world of cryptocurrency is evolving as rapidly as the considerable collection of confusing terminology that accompanies it. There’s a lot of skepticism over cryptocurrencies and how they could ever become a day-to-day payment system used by the man on the street. In this research, we show that cryptocurrencies have already made significant headway towards fulfilling the criteria for becoming a widely accepted method of payment.”
Brokerage firm eToro that has backed this latest research believes that in the coming years with more adoption, cryptocurrencies will likely replace the traditional fiat currencies. eToro’s UK managing director Iqbal Gandham said:
“The first email was sent in 1971, but it took nearly three decades for the technology to become commonplace with a user-friendly interface in the form of hotmail. The first ever bitcoin transaction took place a little over eight years ago and today we are already seeing it begin to meet the requirements of everyday money. Given the speed of adoption, we believe that we could see Bitcoin and other cryptocurrencies on the high street within the decade. There are of course barriers to mainstream adoption, but they are far from insurmountable.”
Imperial’s Zeynep Gurguc, who co-authored the report, said:
“New payment systems (or asset classes) do not emerge overnight but it is worth noting that the concept of money has evolved – even in our lifetime – from cash to digital or contactless payments.”
In the last few days, Bitcoin and the overall cryptocurrency market has shown some minor recovery with Bitcoin gaining more than 10% from the low of $6000. At the press time, Bitcoin is trading at $6736 according to the data on CoinMarketCap. The overall cryptocurrency market valuation stands at $266 billion.