As its global reach continues to expand, Bitcoins borderless design and other features may position it to become an international trade currency in the future.
So says Citi in a 108 pages report entitled Bitcoin at the Tipping Point where they analyze its transformation and where it might be headed.
They say initially the focus was on blockchain the technology, this new way of preventing double spends and keeping accounts in a new type of payment.
Then there was the focus on censorship resistance and as a store of value for a currency with apparently 35% of US businesses accepting bitcoin according to the report.
They argue now the focus is on scarcity with bitcoin seen as digital gold due to its finite supply, but its final form they say is as a global currency facilitating international trade.
A focus on global reach and neutrality could see Bitcoin become an international trade currency. This would take advantage of Bitcoins decentralized and borderless design, its lack of foreign exchange exposure, its speed and cost advantage in moving money, the security of its payments, and its traceability, they say.
Bitcoins biggest strength and its biggest driver from a fundamentals perspective has been speculated for some time to be its role in international trade.
It is somewhat small relatively speaking, but it is what puts a floor on its price and brings constant demand that is not sensitive to price movements because theyre using it for the specific function of moving value.
A Brazilian merchant paying a Chinese shipper can go through all the American banks with their potential risks, as well as potential delays, or can finish the deal in ten minutes by paying with bitcoin.
If merchants can move seamlessly between the fiat, cryptocurrency, and stablecoin realms, there are certain advantages that Bitcoin may offer that differentiate it from central bank digital currency or from stablecoins, Citi says, adding:
A decentralized cryptocurrency might be preferred as no government or outside entity can take steps that might affect the supply of the trade ...
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