Bitcoin has potential to become 21st century gold: Deutsche Bank
Like the yellow metal, this cryptocurrency has deflationary properties
Bitcoin has deflationary properties and this cryptocurrency has the potential to become the 21st century gold, according to a Deutsche Bank report. Bitcoin will be more mercurial in the coming times, The Times of India reported quoting from an interview of senior economist at Deutsche Bank Research, Marion Laboure. She said Bitcoin’s high value and limited stock of 21 million coins make it a popular hedge against inflation. She further noted that about 66% of Bitcoins are used for investments and speculation and its price is to a great extent influenced by the attitude and approach of investors and crypto enthusiasts.
Being the first cryptocurrency, Bitcoin has the largest market capitalisation and enjoys mainstream institutional support, the news report said. Ethereum, the ‘runner-up’, leads the market in different ways as it has many practical applications in the blockchain industry, mainly in DeFi and NFT platforms, the Times of India report said.
Laboure termed Ethereum as the digital silver. However, there are other cryptocurrencies like Polkadot, Solana, Binance and Cardano that could give tough competition to Ethereum with their smart contracts, according to another report.
Laboure also listed the two demerits of cryptocurrencies. The first is the absence of regulation that discourages investors. The second demerit is crypto mining that leaves a massive carbon footprint.
She said Deutsche bank analysts expect many countries to have a strong crypto regulatory framework by 2022.
On the important question of whether central bank digital currencies (CBDCs), cryptocurrencies and cash coexist or not, she said CBDC, cash and crypto will coexist and one will not replace the other. CBDCs are digital forms of fiat currencies, unlike cryptos that are completely decentralised.
Cash payments may in fact decrease with the surge and enforcement of CBDCs and cryptocurrencies.
India is also in the process of enforcing a cryptocurrency regulatory framework and is planning to launch the pilot project of its CBDC soon, The Times of India report said