The Economist Intelligence Unit recently published a report titled “Digimentality 2021—Digital currency from fear to inflection.”
The report focused on investigating how customers and institutional investors trust cryptocurrencies and what boundaries may exist to fundamental monetary functions becoming predominantly electronic or digital.
A consumer survey of 3,053 people has conducted in February and March 2021 for the first part of the report. About half of the respondents came from developed economies and a half from developing ones. The second part of the report was a survey of 200 institutional investor and corporate treasury management conducted from February to April 2021.
Consumer Survey
Consumers show growing favor of digital transactions. Moreover, those in the survey agree that the case for digital currencies and assets using cryptocurrencies is significantly more compelling due to the Covid-19 pandemic.
The most common form of digital currency that consumers report using continues to be the open-source variety (cryptocurrencies such as Bitcoin) claimed by 18% of survey takers. For open-source cryptocurrencies, the main drawback is a lack of knowledge, according to survey-takers (cited by 51%). This is followed by security concerns (34%) and difficulties knowing where to buy (29%).
Nine percent of respondents in the 2021 survey say the country they live in is already cashless (defined as using predominantly digital instead of physical payment methods), a similar number as the previous year (10%). However, in 2021, 17% said they expect their country to become cashless within a year or two, representing a rise from 14% previously. Indicative of this trend, 19% say their country will never become cashless.
Due to growing CBDC coverage in news cycles, governments gained in the influence rating this year, reaching 27%, as did consumers 30%, while the business figure dwindled to 38%. Yet, the overall order of influence remains unchanged.
While still maintaining the most impact, it’s believable that corporations will pave the way to the point that consumer and government adoption rises enough that they carry the cashless trend to a peak.
Institutional investor and corporate treasury survey
Ray Dalio, the founder of Bridgewater Associates, said,
It seems to me that Bitcoin has succeeded in crossing the line from being a highly speculative idea that could well not be around in short order, to probably being around and probably having some value in the future
Change in the institutional landscape is coming swiftly. The increase in cryptocurrencies such as Bitcoin has brought renewed attention from banks, financial services firms, and corporate treasuries.
For example, in February 2021, Tesla announced it had brought more than US $1 billion in Bitcoin into its corporate treasury and would accept it as a form of payment in the future. However, Tesla reversed its payment stance in May, citing concerns about energy consumption related to Bitcoin’s foundation even though some reports claimed that the reason was not relevant.
For corporate organizations, digital currencies are on the radar both as a transactional unit and a store of value or appreciation.
In terms of crypto acceptance by institutional investors and corporate treasuries, 47% of respondents said that overall market trust or understanding of digital currencies was the biggest adoption obstacle.
Some 32% of survey takers cited cryptocurrency regulations as a primary obstacle to wider institutional acceptance, while 43% and 36% said financial market structures and asset volatility were the foremost obstacles. Mathew McDermott, The Global Head of Digital Assets at Goldman Sachs, said
Our clients want to get exposure to Bitcoin and increasingly more
different cryptocurrencies, like Ether [the native currency of the
Ethereum blockchain]It’s still a very nascent market but we are looking at different ways to facilitate client appetite to get exposure in a way that’s compliant from a regulatory perspective
Cryptocurrency is becoming increasingly famous among Indian millennials also. Todayq Education has seen a massive growth of 64% new users in India enrolling into cryptocurrency beginners course in Q1 2021. Also there has been a heavy impulse on crypto exchanges and sustained retail demand in India in recent months despite the ever-present regulatory concerns.