New research shows the rise of bitcoin is to become the world’s 6th largest global reserve currency by 2030, and that the top 100 global financial institutions are set to invest $1bn into blockchain projects in the next 1-2 years.
The findings come from a new report issue by Magister Advisors, who advise the tech industry on mergers and acquisitions. It found that leading banks each already have 10-20 blockchain projects underway
The blockchain technology is currently being used by these institutions to complement core infrastructure like wire transfers, storing metada in tasks such as settlement and clearer. However, the report feels that the technology has greater potential use.
Jeremy Millar, partner at Magister Advisors who led the research, said: "Blockchain is not a flash in the pan. The transparency of its processes and its array of potential applications make it virtually inevitable that it will become the default validation standard.
"Blockchain technology will underpin a growing number of routine transactions globally as trust grows."
The reports also says that blockchain and Bitcoin will diverge, with blockchain having a wider impact on business and consumer life.
Magister Advisors estimate that 90% of Bitcoin value is being held for speculation, not commercial transactions, making this its primary use in developed markets. ‘Money market funds’ or ETF (Exchange Traded Fund) equivalents are being created for Bitcoin.
Millar said: "It is worth noting that futures trading volumes are three times or more the volumes on stock exchanges. Traders are addicted to volatility and we mustn’t underestimate the significance of speculation."
The report says the actual number of transactions is being "underreported by an order of magnitude" by not factoring in "off-chain transactions."
While some authorities dislike Bitcoin because it can currently bypass regulation, the report notes that there are various start-ups now working on exposing Bitcoin that is used for proceeds of crime and money laundering.
Other findings in the report include a growing Chinese presence in blockchain , and the use of Bitcoin or cross currency payroll.
Magister Advisors spoke to 30 leading Bitcoin firms.
