Bitcoin is just the beginning

Bank of America has started intensive research on crypto currencies, emphasizing above all that the crypto market is now too big to ignore.

Despite their niche existence, cryptocurrencies have long since arrived in many areas of the world. At the latest since September 7th, the date of the introduction of Bitcoin as legal tender in El Salvador, all major banks and states have had Bitcoin on their radar.

Bank of America is also certain: Bitcoin has become too big to be ignored. Bank of America began its digital asset research on October 4, 2021 and published a report titled “Digital Assets Primer: Only the first inning” released.

The bank is interested in more than just the market leader Bitcoin in the cryptocurrency sector. One would also like to focus on NFTs, DeFi and CBDCs.

So far, the financial institution had focused exclusively on Bitcoin. DeFi products are now also moving into the foreground of the bank. Bank of America even compares this to tech giant Apple. “Digital assets that allow building a platform like the Apple iPhone did for applications are the ones that appreciate the most; the top three: Ethereum, Cardano and Binance Coin, ”the report says.

In principle, DeFi products are even in direct competition with banks. Because Ethereum, Cardano and Co. enable the creation of smart contracts, so-called intelligent contracts, also the development of decentralized platforms for lending. In a smart contract, the individual parts of the contract are listed in a forgery-proof manner. No third party is needed between two negotiating people.

Despite the competitive situation, Bank of America does not see any reason for skepticism. As soon as the regulatory measures have been finally drawn up by the US Securities and Exchange Commission, the development of DeFi applications is optimistic.

The report says:

“The SEC is investigating DeFi applications and companies to determine if and how they should incorporate them into the current regulatory framework. We are optimistic about the long-term growth of this segment when it matures and regulatory uncertainty clears. “

The bank has also given its first assessment of CBDCs (Central Bank Digital Currency). It is only a matter of time before the world’s central banks bring their own digital currencies onto the market.

One example of this is the digital euro. The European Central Bank had announced that it would investigate over the next two years what the digital euro could look like in the future. The digital euro itself, on the other hand, cannot be expected for another five years.

Bank of America emphasizes that there is no longer any question of whether digital central bank currencies will even hit the market. According to the bank, this scenario is now inevitable.

NFTs (non-fungible tokens) are currently experiencing a huge hype. This is forgery-proof evidence on a blockchain basis. This can be used, for example, to certify the rights to digital art or music. It is precisely in this segment that the bank sees the potential of NFTs.

The company’s report says, “NFTs can be used in place of deeds, titles, or anything currently required to prove ownership – all without a middleman charging a fee.” Bank of America continues to believe that it is not just a bubble in the NFT sector.

Basically, Bank of America seems extremely bullish. While cryptocurrencies have long been dismissed as a gimmick, Bank of America sees potential in the entire market – from normal cryptocurrencies to DeFi applications to NFTs.