Saying “it’s difficult to overstate how transformative” blockchain, digital assets and DApps can be, a pair of analysts argue investors can no longer afford turn their backs.
Cryptocurrency-based digital assets have become an investment sector that is “too large to ignore,” according to a new research paper from Bank of America.
With a $2 trillion market value and more than 200 million users, digital assets have the potential to become “an entirely new asset class,” BoA crypto and digital assets strategy analysts Alkesh Shah and Andrew Moss argued in the October 4 report.
It’s a view that is growing among mainstream financial companies and big investors. In September, a survey of institutional investors by Fidelity Digital Assets found that almost 90% find digital assets appealing, and 80% felt they have a place in investment portfolios.
While acknowledging Bitcoin’s primacy, Shah and Moss said:
“The digital asset ecosystem is so much more: tokens that act like operating systems, decentralized applications (DApps) without middlemen, stablecoins pegged to fiat currencies, central bank digital currencies (CBDCs) to replace national currencies, and non-fungible tokens (NFTs) enabling connections between creators and fans.”
As a result, they said:
“It's difficult to overstate how transformative blockchain technology, digital assets and the thousands of decentralized apps that have yet to be created could potentially be.”
Aside from DApps used to trade digital assets, blockchain-based cryptocurrencies are creating a “new generation of companies” that will cut across industries including finance, supply chain, gaming and social media, the pair said.
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The Token Economy
The fastest-growing cryptocurrencies, they said, are those that run the DApp-platform blockchains, such as Ethereum and its competitors. Comparing them to Apple’s iPhone and its App Store, Shah and Moss said their view is that digital assets offer more opportunities than skeptics believe. They added:
“In the near future, you may use blockchain technology to unlock your phone; buy a stock, house or fraction of a Ferrari; receive a dividend; borrow, loan or save money; or even pay for gas or pizza.”
While noting potential regulatory headwinds, they predicted — as have many in the cryptocurrency industry — that a strong regulatory regime could turn into a tailwind supporting the digital asset ecosystem.
“It's difficult to overstate how transformative blockchain technology, digital assets and the thousands of decentralized apps that have yet to be created could potentially be. We expect rapid changes to the current market structure.”
