Many analysts believe that 2020 could spark mainstream adoption of bitcoin and crypto in general. While many point toward retailers or major international companies that could initiate the process of mass adoption, it seems that central banks may be at the forefront of fintech innovation.
Fundamental analysis: Japan to rival China with the national digital currency
It was reported a few weeks back that China is preparing to issue its own national cryptocurrency, maybe even this year. Although the People’s Bank of China (PBOC) hasn’t officially confirmed the news, analysts believe that China’s goal is to issue digital yuan in order to challenge the global dominance of the U.S. dollar.
“Ultimately I expect the digital yuan to play an important strategic role in China’s ongoing efforts to become a global financial superpower and compete with the U.S. dollar as the world’s number one reserve currency,” said Garrick Hileman, head of research at Blockchain, and researcher at the London School of Economics.
Media also reported that central banks of Britain, EU, Sweden and Switzerland have also discussed possibilities of issuing a central bank digital currency. The latest major country to join the list is Japan.
Around 70 members of the Parliament, belonging to the governing coalition, have teamed up to work on the proposal for Japan to issue its own digital currency.
“The first step would be to look into the idea of issuing a digital yen. China is moving toward issuing digital yuan, so we’d like to propose measures to counter such attempts,” said Norihiro Nakayama, parliamentary vice minister for foreign affairs.
The idea is that the government and private sector work together to develop the nation’s digital currency. Last week, the Prime Minister confirmed that his government will work closely with the Bank of Japan to study digital currencies.
Analysts believe that central banks and their competition, as seen from the example of China and Japan, could trail the blaze for the mass adoption of new digital currencies. In addition, projects such as Facebook’s Libra, which have access to billions of customers and users, can take the fintech revolution to another level.
As seen in the picture below, the current cryptocurrency market capitalization is around $230 billion. Given the overall global potential of digital currencies, the entire market can be measured in trillions of dollars soon.
Since Bitcoin completely dominates the overall crypto market, it is expected that the world’s biggest digital coin should benefit the most from massive crypto adoption. A substantial increase in the worldwide mass adoption of crypto is likely to provide a major boost to Bitcoin price.
Japan has joined the list of countries that are closely looking at plans to issue a central bank digital currency in the coming years. Given the recent news from China, where the superpower is already at an advanced level of development of the digital yuan, other major countries may accelerate their plans as well.
As a result, central banks may easily take the fintech revolution to another level with Bitcoin looking to benefit the most.