Cryptocurrencies are the ‘next natural step’ for the global economy, academics from Imperial University have claimed. A new report from the respected institution suggests that within a decade people could use Bitcoin to pay for their weekly shop.
The study, commissioned by cryptocurrency exchange eToro presents research from Professor William Knottenbelt and Dr Zeynup Gurguc. The academics claim that digital coins already have passed one of the three fundamental criteria for becoming a legitimate currency: acting as a store of value.
Further, they suggest that we are close to seeing cryptocurrencies fulfilling the other two roles: becoming a medium for easy exchange of goods and services and acting as a unit of account, meaning they would act as a measurement of value in the global economic system.
For certain people, cryptocurrencies already conform to the stated tenets for acting as a bona fide currency. At present, protracted wait times combined with barriers such as limited technical knowledge from the general populace and lack of regulation, hinder the general adoption of cryptocurrency.
The study comes days after Bank of England Deputy Governor Sam Woods warned chief executives in the City of the risks of cryptocurrency. Woods reminded them of the “high price volatility and relative illiquidity” before stating that the cryptocurrency craze could expose their businesses “to reputational risks” and fraud.
Despite this, Knottenbelt and Gurguc’s research was positive; Knottenbelt stated regardless of “scepticism … cryptocurrencies have already made significant headway towards fulfilling the criteria for becoming a widely accepted method of payment”.
Iqbal Gandham, eToro’s UK Managing Director adds: “Given the speed of adoption, we believe that we could see Bitcoin and other cryptocurrencies on the high street within the decade. There are of course barriers to mainstream adoption, but they are far from insurmountable.”
Dr. Zeynep Gurguc from Imperial said: “New payment systems (or asset classes) do not emerge overnight but it is worth noting that the concept of money has evolved – even in our lifetime – from cash to digital or contactless payments. The wider use of cryptocurrencies and crypto-assets is the next natural step”.
While the long-term ramifications of cryptocurrencies remain to be seen, Imperial’s research certainly suggests viability for digital coins.