Cryptocurrency, an emerging digital mode of payment, is opening new avenue in the financial sector. The emerging trend of cryptocurrency brings high impact on financial sectors, as more countries are likely to accept and legalise cryptocurrencies by the end of the year.
Despite ongoing debate for and against virtual currency, current trend has shown that it is gradually gaining mainstream acceptance across the globe, mainly by millennials. Enticed by the surging price of Bitcoin last year, it is revealed that one out of three millennials age between 18 and 35 will invest in cryptocurrency by the end of this year. They prefer to invest US $1000 in Bitcoin rather than investing the same amount in government bonds or stocks.
With the growing acceptance of Bitcoin, one of the largest market capitalisation cryptocurrency, by over 20,000 businesses across the globe, Bitpay’s (global Bitcoin payment service provider) global payment volume has increased by 328% CAGR from 2016. Bitpay is now estimated to cross US $1 billion mark annually in Bitcoin payment acceptance and payouts.
Top three cryptocurrencies and its market capitalisation in comparison
Moreover, the acceptance of cryptocurrencies is further boosted due to encouragements by business firms. For instance, many companies and startups currently prefer to raise funds through Initial Coin Offering (ICO) instead of the traditional Initial Public Offering (IPO). This is because raising ICO is faster and ensures transparency of financial resources for parties involved. Consequently, the acceptance of cryptocurrency as collateral to finance startups has opened up new avenue in the financial sector, which was earlier dominated by the banks. As a result, this is posing new challenges to conventional banking system, particularly in countries where interest rates are high.
Cryptocurrency in the Making of Cashless Societies
Powered by blockchains and distributed ledgers, many countries are considering cryptocurrency as probably the best measure in the making of cashless societies and Sweden is ahead in this regard. Out of six major banks in Sweden, five banks neither store nor accept cash.
In the course of being the first cashless country of the world, Sweden is rooting in Bitcoin as it is the perfect fit according to the recent Tax Authority guidelines. The rapid legalisation of cryptocurrencies in many countries illustrates may bring at least half of the world’s nations to be cashless by the end of 2030. More than 30 countries in Europe legalised cryptocurrencies, followed by 20 in Asia, six in North America, five in Africa, four in South America and two countries in Oceania.
On top of that, more than 10 countries such as China, Russia, Saudi Arabia and many more are planning to develop its own digital currencies in the near future.
To learn more on cryptocurrency and how it will revolutionise the financial sector, download a complimentary white paper by Frost & Sullivan, Cryptocurrency: Future of Finance here.
Subarna Poudel is a researcher with Frost & Sullivan. He can be reached at firstname.lastname@example.org