Bitcoin is expected to gain momentum and become the sixth largest global reserve currency by 2030, as banks are set to invest over $1 billion in blockchain technology over the next couple of years, Magister Advisors’ research has revealed.
In an interview by the Silicon Valley investment boutique, the majority of executives at Bitcoin firms said that the cryptocurrency will become the sixth largest global reserve currency within 15 years and that blockchain will become the foundation of finance in the future.
"Blockchain is without question the most significant advancement in enterprise IT in a decade, on a par with big data and machine learning. What JAVA is to the Internet, blockchain is to financial services. We have now reached a fork in the road with Bitcoin and blockchain. Bitcoin has proven itself as an established currency. Blockchain, more fundamentally, will become the default global standard distributed ledger for financial transactions,” Jeremy Millar, partner at Magister Advisors, and lead of the research, said.
Magisters Advisors sees that the estimated $1 billion investment in Bitcoin and blockchain will happen over the next 12 to 24 months. The group has also found that top banks have portfolios of 10 to 20 Bitcoin-related projects underway.
With the Bitcoin revolution seemingly inevitable, Magister Advisers note that the Bitcoin technology will only complement - and not replace - core banking and financial infrastructure present today. The company notes, however, that there is greater potential with Bitcoin, given the flexibility and robustness of the technology, ranging from property registries to security infrastructure to direct payments.
“Banks will initially be unwilling to remove the core infrastructure that handles the process of clearance and settlement but they will increasingly run parallel blockchain processes, evidence by the spike in investment that our poll has identified," Millar said. “Growing vendor acceptance and the adoption of bitcoin in developing markets are creating a pincer movement that will lead to widespread business and consumer acceptance and adoption over time."
Today, usage of Bitcoin varies among different markets. Magister believes that 90 per cent of the crypto currency’s value is held on speculation, while in developing markets, 90 per cent of its usage is for commercial use.
Interest in speculation has even creation of a number of bitcoin "money market funds" or ETF equivalents, but its usage still remains high in developing markets and 90 per cent of the transactions occur in those regions, according to the largest Bitcoin wallets, the group said.