Findings in a report by top global financial institution, Deutsche Bank, suggest there could exist up to two hundred million blockchain wallet users by 2030 if current trends continue, meaning more projects and users along the line. The estimate is based on a comparison between the adoption rates for blockchain wallets and the Internet which the bank says both share similar curves after adjusting for scale – at least for now.

The German bank cites that various factors could influence blockchain’s growth and the current adoption rate of cryptocurrencies. They include generational views as the survey of 3,600 customers in China, France, Germany, Italy, the UK, and the US reveals three main barriers preventing a move from cash to cryptocurrencies. They all relate to age. Others are cultural perspectives as related to the tension between privacy and convenience; regulatory reviews touching on risks related to cryptocurrencies such as liquidity, custody, anti-money laundering and security; and the concern related to energy consumption.

China role crucial to blockchain adoption 

It also talks about the need for cryptocurrencies to forge alliances with key mobile payment apps, card providers, and retailers to make them widely accepted by retailers and achieve global reach in the payment market. China comes into the picture in this regard. The proposed Chinese digital currency could be used across major payment platforms, including WeChat Pay, Alipay, and UnionPay, the report says, as it is “strategically positioned to become de facto a global digital currency in emerging economies.” It states:

“Today’s adoption rates could, and likely will, change. If the Chinese government, along with Google, Amazon, Facebook, or Apple (the so-called GAFA group), or a Chinese company like Tencent can overcome some of the barriers to cryptocurrencies. …then cryptocurrencies could become more appealing. This will hasten their adoption and give them the potential to replace cash.”

It adds that relatively few people have bought and sold cryptocurrencies so far as they are largely seen as a supplementary means of financial transactions and not necessarily substitutes for mainstream methods.

“If we only consider the digital currency itself, it probably will not change much. However, looking at the broader context, the relationship between China and the world is changing and China may follow the market recipe to help make the renminbi a dominant currency.”

China’s digital currency important as cash stays

The approval of Facebook’s Libra in the US could see other central banks loosen regulations over time. This could reinforce the “dollar dominance” globally regardless of whether China blocks it as people can use indirect ways to purchase it from abroad. China launching a digital currency is also significant because China is the world’s second largest economy with a 12% share of global consumer spending in 2018 in dollar terms, forging towards becoming one of the world’s biggest consumer markets before the end of the coming decade.

“As China (and India) develop electronic, crypto, and peer-to-peer strategies, the epicentre of global economic power could shift,” the report states. “China is working on a digital currency backed by its central bank that could be used as a soft- or hard-power tool. In fact, if companies doing business in China are forced to adopt a digital yuan, it will certainly erode the dollar’s primacy in the global financial market.

“We can deduce much about the future of payments from developments in China where the country is developing world-leading digital payments infrastructure. There, the value of online payments is equivalent to three-quarters of GDP, almost double the proportion in 2012. Today, just under half of in-store purchases in China are made via a digital wallet, way above the levels in developed markets.”

The survey shows that the US-China trade war has led investors to increase their cash holdings, and people also like cash for easy tracking of their spending. However, despite that cash may stay, the coming decade should see digital payments grow fast while plastic cards disappear. Meanwhile, a large majority of millennials reportedly believes cryptocurrencies will be good for the economy and over a third of them already sees cryptocurrencies replacing cash.