Mass adoption of bitcoin is just a matter of time, and as the world faces that fact traditional financial institutions are warming up to the digital coin. Deutsche Bank analyst Marion Laboure has stated once more that Bitcoin could become “the 21st century digital gold,” but does not it as a reliable store of value today and expects more volatility in the foreseeable future.
The Future of Bitcoin
Analyst Marion Laboure has pointed out that she does not consider Bitcoin to be a means of payment, nor does she thinks it has deflationary characteristics because “Bitcoin is risky: it is too volatile to be a reliable store of value today. And I expect it to remain ultra-volatile in the foreseeable future,” she claimed and noted three reasons for it:
“First, about two-thirds of Bitcoins are used for investments and speculation. Second, due to its limited tradability, just a few additional large purchases or market exits can significantly impact the supply-demand equilibrium. Third, Bitcoin’s value will continue to rise and fall depending on what people believe it is worth. Small changes in investors’ overall perceptions about Bitcoin can have a large impact on its price.”
However, Laboure does believe the digital coin could become a safe haven asset and play the role of a “digital gold” as “People have always sought assets that were not controlled by governments,” and gold has had this role for centuries but the adoption of bitcoin could potentially turn into “the 21st-century digital gold.”
In a comparison between Bitcoin and Ethereum, the analyst called the former “the pioneer” due to its much larger market cap, but she also sees in Ethereum a possible “digital silver” because of its many applications and uses cases, citing decentralized finance (DeFi) and non-fungible token (NFT).
She believes that, for these same reasons, it would be unlikely for another crypto-currency to become stronger than Bitcoin and Ethereum in the next 5 years.
Laboure pointed out that there is now a trend for venues to accept a wide variety of forms of payments, and a growing number of shops are starting to accept cryptocurrencies, but Bitcoin and Ethereum are not a common form of payment yet.
The analyst added that “although the latest developments will allow faster and cheaper transactions, it takes about ten minutes to validate most transactions using Bitcoin. And it’s expensive: the transaction fee has been at a median of about 20 US dollars in 2021.”
Now, this last part seems like a weird allegation. One would not think of Laboure as someone who does not know about The Bitcoin Lightning Network (the layer two payment solution that enables off-chain transactions, resulting in more speed and low fees of 1 satoshi or a few cents), given that she was named one of eleven crypto-currency masterminds by Business Insider and she is a recognized expert in financial technology.
In fact, Laboure mentioned the Lightning Network in a recent interview published on December 14, 2021, where she noted that El Salvador is using the network “so fees are pretty low” and said we are looking in the direction of bitcoin becoming a method of payment.
The Issue With Crypto
Laboure added that “The main issue with crypto-currencies is the lack of regulation,” which prevents many investors and businesses from approaching the market, but she has more consistently stated that regulations are coming in 2022.
“In terms of regulatory measures, we expect 2021 to be a game changer and that by 2022 many economies will have a strong crypto asset regulatory framework in place.”
In terms of CBDCs, the analyst believes “CBDC, cash and cryptos will coexist.”
“Cash will certainly not disappear, but we expect it to decline as a mean of payment. Most G20 countries plan to impose stricter regulations on private crypto-currencies. Over the past three years, central banks and governments around the world have multiplied and sped up digital cash initiatives.”