Central bank digital currencies (CBDCs) may be the catalyst to drive widespread adoption of blockchain technology, according to a report by Citigroup. In its “Money, Tokens, and Games” report, the bank stated that blockchain technology will be measured in “billions of users” and “trillions of dollars in value” in the coming years. However, the report suggests that the growth of blockchain technology may be dependent on the use of CBDCs.
Citigroup predicts that by 2030, up to $5 trillion worth of CBDCs could be circulating in major economies worldwide, with half of the value tied to distributed ledger technology. Ronit Ghose, Future of Finance Global Head at Citi, said CBDCs would be a “Trojan horse” to get more people comfortable using blockchain technology.
“CBDCs will push the adoption in financial services of tokenized assets [and] tokenized money,” Ghose said in an interview with a news outlet. Ghose also predicted that blockchain technology’s growth in the next three to five years would be driven by CBDCs, securities, and tokenized assets in gaming.
“Gaming will also be a serious catalyst for the technology,” he added. The potential of blockchain technology is not limited to the financial sector. The gaming industry, which has grown exponentially in recent years, is expected to be a significant catalyst for the technology’s growth. Ghose predicts that blockchain-based gaming tokens will “take off in the next two or three years.” These tokens will enable players to purchase and trade virtual assets and items within a game, making in-game transactions more transparent, secure, and cost-effective.
Ghose also stated that the use of CBDCs would likely vary by region and use case, with China likely to take a more centralized approach in its use of a CBDC. Meanwhile, India could benefit from cross-border CBDCs.
The use of CBDCs could also help in areas where traditional financial systems are fragmented. Blockchain technology can provide a more secure, transparent, and cost-effective system for payments and transactions, which could benefit developing countries.
However, despite the potential benefits, there are concerns around the use of CBDCs, including privacy concerns and the potential for increased government surveillance. The Citigroup report is the latest indication of growing interest in CBDCs by major financial institutions worldwide. Several countries, including China, Sweden, and the Bahamas, have already launched or are piloting CBDCs.