The great authorities of the world are getting more serious about the potential of the digital economy year by year, month by month. The criticism is still here but is getting weaker as the results and intentions of big market players show a major success.
As a result, on July 15, the IMF published a report called ‘The Rise of Digital Money’ outlining the potential effects cryptocurrencies will possibly have on the current financial system and regulatory environment.
The concept of digital currency is now firmly embedded in the mainstream, a trend that is set to gain increasing traction, stated Nick COWAN, CEO of the Gibraltar Stock Exchange (GSX) Group, and also added:
“It is important to remember that the rise of bitcoin and digital assets has been fueled, in part, due to growing dissatisfaction with the status quo of traditional finance and the associated problems such as transaction delays, unnecessarily protracted processes, and frustrating intermediary fees. As long as these issues are prevalent, the allure of digital currency will be strong.”
“It’s becoming increasingly evident that they may succeed, as the report correctly points out — big tech firms and fintech start-ups are experts at delivering convenient, attractive, low-cost and trusted services to a large network of customers.”
Dave HODGSON, Director and Co-founder of NEM Ventures, the venture capital and investments arm of the NEM blockchain ecosystem, said:
“Digital currencies allow for the efficient and cost-effective transfer of value between two parties and aren’t reliant on national borders. This makes them largely resilient to attempts at national control and manipulation, while also removing systemic inefficiencies within the current financial systems, namely with layers of intermediaries. I can receive an Amazon parcel from the USA to Europe, faster than I can remit funds via Swift to pay for them; that's not good enough.”
The barriers are still here but not for long
Not only is this growth of digital money causing disruption for traditional financial players but it is also forcing them to take heed of the space, stressed Christophe De COURSON. Meanwhile, Governor of the Bank of France, Francois Villeroy De GALHAU, said that the bank is observing ‘with great interest’ initiatives in the private sector which aim at developing networks within which stablecoins would be used in transactions involving ‘tokenized’ securities or goods and services. The IMF report highlights both the looming reality for legacy institutions and the potential for major disruption from FinTech.
“Several cryptocurrency companies are now starting to cross over into traditional digital money by offering banking (IBAN, Debit card etc) services such as Wirex, Coinbase and Crypterium. It’s also worth noting that in Asia the concept of digital money is well established with services such as Alipay and Wechat.”
Sebastian HIGGS, Director at Vo1t, states that for companies and businesses who make numerous international payments or operate in economies with weak domestic currencies, it may make sense to hold digital currencies, and adds:
“With cryptocurrencies, the friction of moving between assets is already low, and I believe this will disappear almost entirely with the development of interoperability. Depending on whether you need to prioritise cost, privacy, smart contract execution, or even adhering to restrictions imposed by the merchant, digital currencies offer more flexibility to the user and will continue to rival traditional finance.”
So, the IMF acknowledged that digital money has shrugged and ready to conquer the world. Despite all the possible barriers, soon it will be the standard — and for legacy players, it’s better to accept it than oppose it.