Cryptocurrencies Will Become Mainstream in 10 Years, Says eToro and Imperial College Research
New research from global investing platform and crypto exchange eToro and the Imperial College London has found that cryptocurrencies have the potential of becoming a mainstream form of payment in the next 10 years.
In the research paper, Cryptocurrencies: Overcoming Barriers to Trust and Adoption, it highlights that digital currencies already fulfil one in three criteria of fiat money: as a store of value.
Professor William Knottenbelt from Imperial College London and Dr Zeynep Gurguc from Imperial College Business School argue that cryptocurrencies still need to overcome the first two functions of traditional money – medium of exchange and unit of account – if they are to tackle the hurdles of becoming globally accepted and adopted payment instruments.
They add that crypto assets can only become a unit of account and a medium of exchange if there is ‘a friendly and conducive regulatory environment.’ Additionally, technical and economic challenges such as scalability, regulation, privacy, and volatility will need to be challenged.
The research argues that over time money has evolved significantly. Quoting Morris Perlman, author of Macroeconomics, the paper states: “Money is like a myth that requires only imagination for its creation, but faith for its effectiveness.” If you look at the earliest forms of money to barter goods it took various forms such as cowrie shells and cattle, to beads from precious metals and even salt.
Over time, money has evolved into coins, notes, and payment cards. More recently contactless and mobile payments are beginning to take hold as we shift our focus to more efficient ways of paying for things. Despite these changes, however, money’s three requirements have remained.
In the case of cryptocurrencies, though, because it’s not a tangible asset there is the misconception that it doesn’t exist, which is preventing it from overcoming the remaining two requirements.
According to Professor Knottenbelt: “The world of cryptocurrency is evolving as rapidly as the considerable collection of confusing terminology that accompanies it. These decentralised technologies have the potential to upend everything we thought we knew about the nature of financial systems and financial assets.”
eToro and the Imperial College London set out six challenges that cryptocurrencies need to address in order to become a mainstream method of payment. These are scalability, usability, regulation, volatility, incentives, and privacy.
“People have grown used to their view of money as a solid, permanently fixed idea when in fact the opposite is true,” said Iqbal V. Gandham, U.K. Managing Director of eToro. “The history of money is a history of evolution, of new technology replacing old to improve the transfer of value from one person to another. Cryptocurrencies represent a next step on this journey.”