Despite their niche existence, cryptocurrencies have long since arrived in many areas of the world . At the latest since September 7th, the date of the introduction of Bitcoin as legal tender in El Salvador, all major banks and states have had Bitcoin on their radar.
Bank of America is also certain: Bitcoin has become too big to be ignored. Bank of America began its digital asset research on October 4, 2021 and released a report entitled “Digital Assets Primer: Only the first Inning.”
For the bank, the cryptocurrency sector is about more than just the Bitcoin market leader. One would also like to focus on NFTs, DeFi and CBDCs.
Bank of America compares DeFi with Apple
So far, the financial institution had focused exclusively on Bitcoin. DeFi products are now also moving into the foreground of the bank. Bank of America even compares this to tech giant Apple. “Digital assets that enable a platform to be built like the Apple iPhone did for applications are the ones that appreciate the most; the top three: Ethereum, Cardano and Binance Coin, “says the report.
In principle, DeFi products are even in direct competition with banks. Because Ethereum, Cardano and Co. enable the creation of smart contracts, so-called intelligent contracts, also the development of decentralized platforms for lending. In a smart contract, the individual parts of the contract are listed in a forgery-proof manner. So no third party is needed between two negotiating persons.
Despite the competitive situation, Bank of America sees no reason for skepticism. As soon as the regulatory measures have been finally drawn up by the US Securities and Exchange Commission, the development of DeFi applications will be optimistic.
The report says:
“The SEC is investigating DeFi applications and companies to determine if and how they can use them should be included in the current regulatory framework. We are optimistic about the long-term growth of this segment when it matures and the regulatory uncertainty is cleared. “
CBDCs only a matter of time
Also for CBDCs (Central Bank Digital Currency) the bank has given its first assessment. So it is only a matter of time before the world’s central banks bring their own digital currencies onto the market.
An example of this is the digital euro. The European Central Bank had announced that it would investigate over the next two years what the digital euro could look like in the future. The digital euro itself, on the other hand, cannot be expected for five years.
Bank of America emphasizes that there is no longer any question of whether digital central bank currencies will even hit the market. In the opinion of the bank, this scenario is now inevitable.
NFTs as substitute for documents
NFTs (Non-Fungible-Token) are currently experiencing a huge hype. This is forgery-proof evidence on a blockchain basis. This can be used, for example, to certify the rights to digital art or music. It is precisely in this segment that the bank sees the potential of NFTs.
The company report states: “NFTs can be used instead of deeds, titles or anything that is currently required to prove ownership, can be used – and all without a middleman charging a fee. ”Bank of America continues to assume that this is not just a bubble in the NFT sector.
Basically, Bank of America seems extreme to be bullish. While cryptocurrencies have long been dismissed as a gimmick, Bank of America sees potential in the entire market – from normal cryptocurrencies to DeFi applications to NFTs.
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