Global financial institution, Citi Bank, has released a new report on Bitcoin in which the firm talks about the current behavior of the crypto asset and what the future holds for it. According to the report, the leading crypto coin might become the currency used in future international transactions while also referring to the asset as the “North Star.”
Citi also admitted that the digital asset has broken into the mainstream as there are now an increased number of businesses which accept BTC as a payment method now. This marked improvement and trust from these businesses make the base of the virtual currency different from that of 2017 when it was majorly traded mainly as a retail asset.
The report highlights the fact that the cryptocurrency has a global reach and due to its borderless design plus its lack of foreign exchange exposure would make it an ideal currency for future foreign transactions. We are already witnessing this as Iran is exploring the crypto asset as a means of circumventing the sanctions imposed on the country by the United States.
Another major thing that could drive this development is the new perception about the coin. Citi bank stated that the perception of BTC has moved from a focus on its technology, to its ability to resist censorship, and now the focus is on its scarcity. As times goes, the bank predicts the perception would change to how it can be a facilitator of global trades.
Citi Bank Identifies Challenges to Bitcoin’s Success
After identifying the potentials that the leading crypto asset has as a global financial transaction facilitator, Citi Bank states that some risks could stop BTC from attaining such lofty heights.
One reason identified by the bank is that another crypto asset could overthrow Bitcoin from its current zenith. The bank points to the fact that the market cap of altcoins increased by almost 4 times in 2020 compared to that of “digital gold” that stood at only 2.70. Also, the market dominance of the asset has dropped to 62% from its earlier 69% in 2019.
This means that other cryptocurrencies are also growing at a very high rate and they are now beginning to eat into the dominance of the coin.
Also, the threat of inflation that keeps pushing most institutional investors into the crypto industry; if this economic phenomenon is handled by the governments around the world, the asset might just lose its value in the face of institutions who could previously be interested in investing in the industry.