Wednesday, October 6, 2021

Bank of America 'Blesses' Cryptocurrencies and Launches An Outright Bet on Blockchain

"We believe that digital assets could form a whole new asset class". This is how emphatic Bank of America is about bitcoin and the whole universe surrounding it, which has become too big to be ignored, according to the US bank. The firm recognizes the regulatory risks that weigh on cryptoassets but sees in blockchain technology and all its derivatives a promise of long-term profitability too attractive to be dismissed.

For the time being, digital assets are a clear reality, as Bank of America highlights in a report published today. They have reached a market value in excess of $2 trillion and more than 220 million people worldwide have traded a cryptocurrency or used an application based on blockchain technology. A figure that, as of June this year, has grown exponentially from 66 million users in May last year.

More figures: the universe of cryptoassets already exceeds the GDP of major economies such as Italy or Canada. And bitcoin, the main reference in this universe, is now among the ten largest assets in the world in terms of market value, rubbing shoulders with giants such as Tesla and FaceBook. Venture capital has also sniffed out the opportunities of digital assets and the investments of these funds linked to cryptoassets and blockchain reached $17 billion in the first half of the year, according to Bank of America, well above last year's $5.5 billion.

In short, "the digital asset sector is too big to be ignored," says the U.S. institution. In its view, while bitcoin was designed as a currency, it is increasingly being seen as "digital gold". But the digital asset ecosystem goes far beyond bitcoin and encompasses all digital currencies, including those planned to be launched by the world's major central banks, tokens and decentralized applications based on blockchain technology that allow the use of financial products and services without any link to traditional financial institutions.

"Our view is that there could be more opportunities than skeptics assume. In the near future, we could use blockchain technology to unlock your cell phone, buy a stock, a house, collect a dividend or even pay for a pizza," assures Bank of America.

In its enthusiasm for cryptoassets, Bank of America declares its bet on the future of these digital assets with the argument that "we are only at the beginning of the biggest change in the applications of most industries that will occur in the next 30 years" and that "the applications created in this new software architecture would be growing faster than previous technologies".

Despite the clear business opportunity that Bank of America appreciates, regulators continue to warn of the risks involved in investing in digital assets, which are highly volatile and in which small savers can lose their entire investment. In China, they have even outlawed all cryptocurrency trading. Bank of America recognizes that the regulatory risk is the one that weighs most heavily on these assets in the short term, although this regulation may eventually lead to greater investment in the long term once the rules of the game are defined. The entity also relativizes the accusations that weigh on digital assets of being a way of money laundering.

No comments:

Post a Comment

Top Posts