I just picked up Deloitte’s report on blockchain where 76% of finance executives have voted that digital currencies may overtake fiat currencies in the next decade*. Most of us would just read that statement and go meh. Not me. That’s a phantasmagorical statement. People in finance think fiat currencies are dead? What?
If true, we really are in a seismic change moment, where money takes a new form and a new method. What do you think?
Let’s put it a different way and build a scenario for 2031, based upon this idea. In 2031, the USD, EUR and RMB are no longer predominant. We now deal in BTC and ETH. The people have spoken or, more importantly, the network has delivered.
In 2031 there are still shops, but we pay using digital wallets based on digital currencies. Online we can buy and purchase, but we buy and purchase using digital wallets based on digital currencies. Need to pay back a mate for that dinner last night? We send a message money using a digital wallet based on digital currency. EVERYTHING IS DIGITAL.
If that’s true, several things have happened:
- belief in the network is 100%
- belief in the network’s currencies is 100%
- regulation is decentralised
- governments have lost much of their mandate
- digital exchanges dominate
- digital custodians are now bigger than banks
- banks are no longer the custodians
The list goes on and on, but the bottom-line is that we will be living in a radically different world. A truly digital world, where data beats paper every time. Are we there yet?
It’s funny because in 2021, we are living in a world where governments cannot even issue COVID tests digitally with any accuracy. The pingdemic demonstrates this, and the challenge for governments, regulators, traditional firms and incumbent financial institutions. When you cannot even analyse data effectively, how can you operate digitally?
What I see happening is that new firms with true data analytics will arise and old firms with no data leverage disappear. In other words, if the Deloitte survey comes true and in 2031 digital currencies overtake fiat and physical currencies, governments, regulators, traditional firms and incumbent financial institutions are washed up and struggling to find relevance. Digital companies dominate.
The issue with that statement is that it implies Alphabet, Amazon, Alibaba, Ant Group and their brethren dominate. That might also not be the case. I reckon a new firm will emerge and grab the digital currency space. Who? Oh, now that would be telling.
* Postnote: I'm sure they mean Central Bank Digital Currencies
Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...