Early adoption of digital currencies will pay off handsomely for business
(photo: CC0 Public Domain)
Mgood things times forthcoming for digital currencies, predicts athe Gartner company. ANDthe use of digital money among large enterprises will increase to 20% by 2024, experts say. Digital currencies will continue to be used more in business transactions and their economic importance will increase in the following years.
Throughout 2021, there was various news about cryptocurrencies, most of them good. Important among them were a number of announcements that national banks and governments are embracing the technology. In the last few days, it has become clear that the Mexican government also intends to create its own cryptocurrency by 2024, notes TechRepublic. The central bank said on social media that “these new technologies and the latest payment infrastructure are very important as valuable opportunities to promote financial inclusion in the country.”
The latest news is that even the Bank of Jamaica (BOJ) is boldly stepping into the world of virtual money. The bank describes its tests as a success with its own cryptocurrency, which still does not have a name, and seems intent on moving forward with the development of its electronic money. Some bewilderment was aroused by the fact that during the trial only one financial institution adopted the cryptocurrencies of BOJ, but this clearly does not prevent a positive result from the endeavor.
Cautious optimism
Despite Gartner’s promising forecasts, cryptocurrency investors shouldn’t be too excited. Much of what stimulates the widespread penetration of digital money among businesses is the same thing that crypto enthusiasts oppose: regulation and centralization.
Gartner analyst Aviva Litan says businesses will use digital currencies “for payment, as a means of storing value and for the ability to take advantage of high-yield investments available in decentralized financial applications.” Behind this description and the expected growth, in practice, are the stable electronic money and digital currencies of central banks.
Understandably, businesses are avoiding dealing with volatile cryptocurrencies, said Alexander Bant, head of research at Gartner Finance. “The expectation of clearer regulatory guidelines and the emergence of e-money in national banks offer CFOs more opportunities to test the use of digital currencies,” said Bant.
E-currencies of central banks
Central bank e-money is a relatively new concept that, like traditional cryptocurrencies, is based on blockchain tracking, which eliminates the need for an intermediary such as a bank or financial exchange to process transactions. However, these are not speculative currencies: their value is directly linked to the national currency.
The electronic currencies of national banks should be thought of as the digital equivalent of the national currency. A digital unit will cost the same as a physical currency unit. It can also be exchanged completely digitally, as the property is tracked through a centralized blockchain.
In short, we may be on the threshold of the crypto-future that many have dreamed of, but decentralization and the accompanying instability must be overcome in order for there to be grounds for businesses to take the new technology seriously.
The right way
Along with the stabilization of some virtual currencies, there are other factors that make the perception of digital currency more attractive to businesses. These include the availability of ready-made solutions for digital currency, the adaptation of payment networks to distributed registry technology, the tokenization of assets and the growing need for digital currencies for the so-called. metaspace, says Litan.
All of these factors can be confusing. Therefore, Gartner has some specific recommendations for companies considering investing in digital currency. The first recommendation is: “Make sure you have a clear, specific use case.”
“Each primary use comes with a variety of technological, regulatory, legal and strategic considerations – including the selection of appropriate service providers and the ability to monitor and respond to current regulatory guidance,” says Gartner.
Businesses should try to determine the specific scenario in which the use of cryptocurrency is of business interest to them. And, if Gartner analysts are right, the start in this direction can now be rewarded generously: it will put innovative companies in the “elite 20% of companies at the corporate level that are paving the way for the future without paper money.”
