Bitcoin is at the “tipping point of its existence” thanks to large institutional investment and growing regulatory groundwork, according to a new report by Citi obtained by CoinDesk.
While the perception of the cryptocurrency varies greatly, it is undoubtedly the inspiration for a blockchain-based economy and has created a new decentralized cryptocurrency market, according to the paper by Citi Global Perspectives and Solutions (GPS), the bank’s “thought leadership” arm.
Citi describes Bitcoin as blockchain’s “North Star,” owing to its core innovations that formed the building blocks that launched the ecosystem. Whether or not it cedes this status to stablecoins or central banks digital currencies (CBDCs) depends on how it is able to deal with inefficiencies relating to speed, scale and so on.
It will also be significant whether institutional interest cools as life returns to normal post-COVID-19 and inflationary fears abate. “Dampening (sic) institutional enthusiasm would remove a key source of support to Bitcoin and potentially the broader ecosystem, thus pushing it back to its more speculative roots,” the bank paper argues.
Citi’s conclusion references the oft-repeated quote by Arthur Schopenhauer: “All truth passes through three stages: First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as self-evident.”
“The fact that this progressions (sic) has occurred in just over a decade makes Bitcoin remarkable regardless of it future,” the report concludes.
Looking forward, the report suggests bitcoin could “become the currency of choice for international trade,” thanks to its “decentralized design, lack of foreign exchange exposure, fast (and potentially cheaper) money movements, secure payment channels, and traceability.”