Bitcoin may be the world’s first currency of choice for international trade, according to Citi analysts.

 

Bitcoin as a “Global Trade Facilitator”

According to a Citi report, Bitcoin is “on the brink of general acceptance or a speculative explosion.”

The US banking giant published a 108-page document titled “Bitcoin: At The Tipping Point” that assesses the possible future of the digital asset in the global financial system.

Analysts said Bitcoin could become the “preferred currency for international trade” around 2028, depending on several key factors.

Pointing to the role of Bitcoin as the world’s original digital currency, the team stated that it has recently surpassed the $ 1 trillion market value and created a “whole ecosystem”. According to the report, “Bitcoin is the” North Star “that serves as a guiding light for decentralized finance and other areas of the blockchain space.

The report argued that it could have four narratives pushing Bitcoin into mainstream adoption.

The first two focused on technology and censorship resistance when Bitcoin was more commonly referred to as a payment system or currency (Satoshi Nakamoto described Bitcoin as a “peer-to-peer electronic cash system” in the Bitcoin white paper). They also pointed to a phase focusing on scarcity and the “digital gold” thesis. Today, scarcity is arguably the biggest value proposition for Bitcoin, and many institutional investors believe in the “digital gold” narrative.

Citi concluded that the next phase will be “Focus on Globalization” and “Value Exchange Networks”.

Bitcoin could potentially be a “Global Trade Facilitator” at this point, according to the report.

Citi interprets the future of Bitcoin

The report highlighted several data points showing that Bitcoin is gaining interest, such as high trading volumes in over-the-counter (OTC) and crypto exchanges. It also pointed to the growing interest among institutions.

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He also said that Bitcoin could be preferred over a Central Bank Digital Currency (CBDC). The reason for this is that “no government or foreign organization can take steps that could affect the supply of the trading currency, which helps to separate trade from political concerns.” Comment was made.

Despite acknowledging the success of Bitcoin, the report also highlighted several obstacles threatening the future of the asset. Along with scalability issues among institutional investors, “concerns about capital efficiency, insurance and custody, security, and ESG from Bitcoin mining” were addressed.

The report also drew on some key figures in the digital assets space to get their thoughts on Bitcoin. MakerDAO’s Rune Christensen described the asset as “digital gold”, while Grayscale’s Michael Sonnenshein thought “Bitcoin is the next stop in the evolution of money and value.”

Citi’s analyst team argued that the next few years will determine the future of Bitcoin. They concluded that bitcoin was “at its peak of existence”.

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