A new paper from researchers at Imperial College London claims digital currencies are primed for mass adoption. The paper claims that bitcoin and other cryptocurrencies will continue to grow as mainstream payment options, peaking in the next decade. The paper also argues that cryptocurrencies currently act as a store of value, one of three fundamental roles of traditional money. The other two are acting as a medium of exchange, and acting as a unit of account.
Bitcoin and cryptocurrency have been handed huge support this morning from researchers at Imperial College London, who have said digital currencies are primed for mass adoption.
According to the paper — entitled “Cryptocurrencies: Overcoming Barriers to Trust and Adoption” — bitcoin and cryptocurrencies will hit the mainstream as a way of paying for goods and services within the next decade.
The backing of the researchers could boost the price of bitcoin and cryptocurrencies, which many have accused of being less well suited to handling mass payments than the traditional financial system, run by the likes of Visa and MasterCard.
“The world of cryptocurrency is evolving as rapidly as the considerable collection of confusing terminology that accompanies it,” said Imperial professor William Knottenbelt.
“There’s a lot of scepticism over cryptocurrencies and how they could ever become a day-today payment system used by the man on the street. In this research we show that cryptocurrencies have already made significant headway towards fulfilling the criteria for becoming a widely accepted method of payment.”
The paper, paid for by brokerage eToro, found cryptocurrencies are already equipped to fulfil one of the three fundamental roles of traditional fiat money: acting as a store of value.
The three criteria for mass adoption the researchers laid out are:
- Store of value: allowing individuals to make intemporal choices on when to spend their purchasing power
- Medium of exchange: facilitating the exchange of goods and services by eliminating the inefficiencies associated with a barter economy
- Unit of account: acting as a measure of value in the economic system.
According to the paper, “meeting the last two criteria will require bitcoin and other cryptocurrencies to make progress on remaining challenges such as scalability, design and regulation.”
“The first email was sent in 1971, but it took nearly three decades for the technology to become commonplace with a user-friendly interface in the form of hotmail,” said eToro’s UK managing director Iqbal Gandham.
“The first ever bitcoin transaction took place a little over eight years ago and today we are already seeing it begin to meet the requirements of everyday money. Given the speed of adoption, we believe that we could see Bitcoin and other cryptocurrencies on the high street within the decade. There are of course barriers to mainstream adoption, but they are far from insurmountable.”
Imperial’s Zeynep Gurguc, who co-authored the report, said: “New payment systems (or asset classes) do not emerge overnight but it is worth noting that the concept of money has evolved - even in our lifetime - from cash to digital or contactless payments.”
The bitcoin price has — along with most other cryptocurrencies struggled to find footing in recent months after an eye-watering 50 percent sell off at the beginning of the year.
However, in recent weeks the bitcoin price has jumped multiple times — giving some holders hope of a return to the bull market.