In a note recently obtained by Bloomberg, Lisa Ellis, a Moffet Nathanson analyst explains her views on the future of cryptocurrency.
Lisa notes that visiting Starbucks to make a purchase using Bitcoin may no longer be hypothetical in a few years. She states that although it may sound “ludicrous,” cryptocurrencies like Bitcoin and Ethereum are likely going to pose a challenge to the existing digital ecosystems.
Ellis goes on to add that advancements continue to be made to overcome existing shortcomings. That includes coming up with real world cryptocurrency uses. And this means that cryptocurrency is a threat that should not be overlooked.
Particularly, given that it may end up becoming a viable alternative to traditional currency. Traditional currency is constantly being bogged down by inflation.
Digital payment processors, e.g., PayPal Holdings Inc. MasterCard Inc. and Visa Inc., who are the incumbents should not rest easy. Compared to the incumbents, cryptocurrencies have been designed to facilitate faster and smoother money transmission.
Cryptocurrency systems (e.g., Bitcoin, Ethereum, Ripple) are potentially disruptive to private payment systems,
They possess characteristics that directly contradict the available payment systems.
Commoditization of Current Digital Systems
As the situation stands at the moment, cryptocurrencies have chosen to commoditize the incumbents. Ellis goes on to note that existing cryptocurrencies have currently chosen to rate digital systems as buys. That is as opposed to completely removing them from the economy.
Additionally, if networks fail to embrace cryptocurrencies fully, they could risk losing out to crypto especially when it comes to B2B and P2P businesses. Businesses are currently under the control of the three digital payment processors.
The chances are that Veem and Ripple, which have been using crypto-backed tech may soon take over these operations. The MasterCard, Visa, and PayPal are currently controlling the operations. The two are considered ideal for handling transactions of this nature. That makes them, even more, deadlier to the existing players.
Financial institutions have also started to pick up on this emerging trend. JPMorgan Chase & CO. recently held its annual investor day. It announced to its investors that it had successfully tested a coin prototype.
JPMorgan added that cross border money remission and asset transfer via blockchain could soon be made available to its clients. Ellis is, therefore, convinced that blockchain and cryptocurrencies do present unique opportunities for current players.
Ellis concludes by stating,
In overall cryptocurrencies and blockchain present opportunities for the incumbents.
She goes on to add that the two technologies have the potential to open up untapped income opportunities.
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