The world of crypto and digital currency has taken a hammering lately, with many experts warning of a ‘crypto winter’. But regardless of the marketplace volatility, new innovations in security, regulations and developments in the space mean digital currencies and DeFi is here to stay. Furthermore, today, the marketplace fluctuations have actually resulted in identifying the most stable of cryptocurrencies. Bitcoin remains the most popular – and is already going mainstream as more and more vendors enable crypto payments for goods and services on a global scale.
How would you define the digital currency marketplace at this time?
The rising price of bitcoin during the pandemic has renewed interest in digital money – and the digital currency market is booming.
Currently, the digital currency marketplace is undergoing rapid change and innovative tools are emerging. Not so long ago, cash was more or less the only way to make an immediate purchase. However, in the post-covid era, we are now accustomed to using forms of private digital money such as online bank transfers, payment cards and applications on our smartphones or watches.
These are changes that directly affect the role of central banks. While it is unlikely that digital currencies will completely replace existing currencies, the emergence of ‘cryptocurrencies’ and ‘stablecoins’ has prompted the exploration of central bank digital currencies in 2022.
How do you think cryptocurrency will progress over the next few months?
Last year, we saw bitcoin hit an all-time high price, which resulted in additional high-net-worth institutional buy-in from influential organisations. Ethereum, the second-largest cryptocurrency, got its new all-time high late last year as well. US government officials and the Biden administration have increasingly expressed interest in new regulations for cryptocurrency.
But will 2022 be a big year for cryptocurrency? The short answer is no one knows. We can speculate on what value cryptocurrency may have for investors in the coming months. Still, the reality is crypto is such a new and speculative investment with little history on which to base predictions.
However, the many success stories being written about in the media have not gone unnoticed. Many international organisations across multiple industries have now taken an interest — and sometimes, made investments. Over the next few months, we will probably see more significant investments into cryptocurrencies from major banks. AMC bank (a subsidiary bank of Lloyds Banking Group) recently announced it would accept bitcoin payments by the end of 2022. In addition, fintechs like PayPal and Square are also seeking to capitalise on cryptocurrencies by allowing customers to buy on their platforms.
Yes, we’ve seen a tremendous amount of attention, and that’s going to continue to drive the industry’s growth – and over the next few months, we could see bigger, global corporations start to adopt cryptocurrencies even more.
What influences are driving these changes?
Over the last two years, the need for digital currencies has been driven by the rapid digitisation of global economies, the prioritisation of real-time payments and settlements, and the need for more efficient domestic and cross-border monetary interactions. The International Monetary Fund (IMF) recently stated that centralised technologies, such as cryptocurrencies and central bank digital currencies (CBDCs), can reduce expenses, facilitate seamless flow of money, and provide consumers
with safer access to capital through digital channels. Ultimately, digital currencies can provide a more resilient payments landscape, supporting competition, efficiency, controls and innovation in payments. They would also address declining cash usage by improving the usability and availability of legitimate central bank money.