The prevailing sentiment among investors is that open-source cryptocurrencies like Bitcoin or Ether are useful as a diversifier in a portfolio, says Economist Impact’s latest report Digimentality 2022 – Fear and favoring of digital currency. This report is the result of a consumer survey of 3,000 people conducted in January and February 2022.
It delves into consumer trust in digital payments and the stumbling blocks that have hampered the digitization of basic monetary functions. John Mitchell, the CEO and co-founder of Episode Six – a payments company, highlighted the need to move toward a cashless society. He outlined convenience, speed of transactions, inclusion, and efficiencies as some of the advantages. Mitchell acknowledged that the shift towards digital assets requires a shift in technology.
Emergence of CBDCs
The report pointed out that central bank digital currencies (CBDCs) are now favored by 14% of people. This is a big increase from 4% in 2021. As such, one-third of consumers expect their government or central bank to come up with a CBDC within the next three years. The report says that more than 60 central banks are at different stages of CBDC development. It should be noted that China and Sweden have commenced live pilots.
Tobias Adrian, the financial counselor and director of the Monetary and Capital Markets Department of the International Monetary Fund, believes it’s natural for physical cash to be complemented by digital cash. He said the world is becoming more digital and it’s a natural evolution. Adrian highlighted that being able to convert into CBDC might be an important anchor for the digital economy.
Dwindling use of credit/debit cards
The use of physical credit or debit cards, as per the report, has dwindled significantly. Around 8% of consumers now use them. Online banking has seen significant growth and is the most preferred digital option among respondents. In regards to cryptocurrencies, particularly Bitcoin, Ethereum and Litecoin, etc, there has been a steady rise in users. However, cash remains king when it comes to trust. Many people, in this case, 85% of respondents, see cash as a trustworthy method of payment.
In payments, stability and acceptability are very much important.