“Technology will change, and so must we. Lest we remain the last leaf on a dead branch, the others having decided to fly with the wind.”
— Christine Lagarde, head of the International Monetary Fund
Big Four auditor KPMG is one of the most in-the-know business institutions in the world. And it just boldly came out and declared that “crypto-assets are a big deal.”
In a recent report about the “Institutionalization of cryptoassets,” KPMG writes that …
“In 2018, we are seeing a wave of new entrants in the market such as security token platforms, stablecoins and even established financial services institutions that are launching crypto products and services. Cryptoassets are now impossible to ignore.”
The root of KPMG’s enthusiasm is the potential ability of cryptocurrencies to reduce the friction/inefficiences in our current financial transfer system.
It finds cryptos “impossible to ignore” as they start to become a serious asset class — one that will shape the future of our world’s financial system.
Don’t take my word for it, or theirs. That’s because a powerful voice has now joined the crypto chorus.
Christine Lagarde, the head of the International Monetary Fund, recently had a lot to say about cryptocurrencies.
Today, I’m going to quote Ms. Lagarde extensively because to date, she is the most influential person in the world to bang the cryptocurrency drum:
“A new wind is blowing, that of digitalization. In this new world, we meet anywhere, any time. The town square is back — virtually, on our smartphones. We exchange information, services, even emojis, instantly … peer to peer, person to person.
“We float through a world of information, where data is the ‘new gold’ — despite growing concerns over privacy and cybersecurity. A world in which millennials are reinventing how our economy works, phone in hand.
“And this is key: money itself is changing. We expect it to become more convenient and user-friendly, perhaps even less serious-looking.
“We expect it to be integrated with social media, readily available for online and person-to-person use, including micro-payments. And of course, we expect it to be cheap and safe, protected against criminals and prying eyes.
“What role will remain for cash in this digital world? Already signs in store windows read ‘cash not accepted.’ Not just in Scandinavia, the poster child of a cashless world. In various other countries too, demand for cash is decreasing — as shown in recent IMF work. And in 10, 20, 30 years, who will still be exchanging pieces of paper?
“Think of the new specialized payment providers that offer e-money — from AliPay and WeChat in China, to Paytm in India, to M-Pesa in Kenya. These forms of money are designed with the digital economy in mind. They respond to what people demand, and what the economy requires.
“Even cryptocurrencies such as Bitcoin, Ethereum and Ripple are vying for a spot in the cashless world, constantly reinventing themselves in the hope of offering more stable value, and quicker, cheaper settlement.”
The IMF is also envisioning a much-bigger future for cryptos than just sending payments between people. They have a keen eye turned toward the global financial system itself.
The Case for Central Bank-Backed Digital Currencies
The IMF, an organization of 189 countries, works to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.
So, the really “big deal” is that the IMF sees a compelling case for using cryptocurrencies as digital currency. Lagarde went on to say:
“Let me now turn to my second issue: the role of the state — of central banks — in this new monetary landscape.
“For their part, cryptocurrencies seek to anchor trust in technology. So long as they are transparent — and if you are tech-savvy — you might trust their services.
“Let me be more specific: Should central banks issue a new digital form of money? A state-backed token, or perhaps an account held directly at the central bank, available to people and firms for retail payments? True, your deposits in commercial banks are already digital. But a digital currency would be a liability of the state, like cash today, not of a private firm.
“This is not science fiction. Various central banks around the world are seriously considering these ideas, including Canada, China, Sweden and Uruguay. They are embracing change and new thinking — as indeed is the IMF.
“I believe we should consider the possibility to issue digital currency. There may be a role for the state to supply money to the digital economy.”
Wow! Once central banks start issuing cryptocurrencies, early investors — hopefully you — stand to make staggering, generational fortunes.
Of course, it is impossible to tell which cryptocurrencies will become the ultimate winners.
Related post: Is Bitcoin dying? If so, what will replace it?
But I am very positive that the underlying technology — blockchain — is going to become as important and ubiquitous as email and the internet itself.
A handful of forward-thinking, publicly traded companies are betting their futures on blockchain and will richly reward investors who jump on board today.
Don’t get me wrong; cryptocurrencies are here to stay. But the big, big, big bucks will be made from investing in the companies that deliver the blockchain technology behind the cryptocurrency revolution.