Cryptocurrencies including bitcoin in general have been around since 2009, but it is only recently that traditional financial institutions and companies have noticed its potential. The great cryptocurrency rush of 2017 bought them in the limelight and today digital currencies create the same amount of buzz in markets as stocks or funds.
More and more financial companies are starting to discuss about cryptocurrencies with the public. The latest company to do so is the Goldman Sachs Group, a behemoth in the financial industry. The company thinks that bitcoin can be a means for conducting transaction in developing countries and could succeed in those regions by being a regular form of currency.
The currencies of many African nations, for example, has lost a lot of value due to high inflation as well as poor management policies. This has led to citizens of those countries using foreign currency, with them comprising of more than 90% of the total currencies used for transactions in countries like Democratic Republic of Congo. Strategists’ from the organization stated,
“In recent decades the U.S. dollar has served its purpose relatively well, in those countries and corners of the financial system where the traditional services of money are inadequately supplied, Bitcoin (and cryptocurrencies more generally) may offer viable alternatives.”
According to a Goldman Sachs report, for all these years, the US Dollar has served the world well for being relatively stable due to its de facto nature for inter-country and global transactions. But, bitcoin, along with other cryptocurrencies, could be a big boon in those regions where there is still a shortage of traditional forms of currencies. They can also be used in countries where governments declare restrictions on the use of foreign currencies.
The report also sounded a word of caution, by saying that, if digital currencies gain wide adoption, they would cease to provide the super high rates of return which they are currently providing to people holding these currencies.
According to the company, returns provided by cryptocurrencies should normalize with their growth rates returning to single digits at par with other financial commodities. They also advised to think of cryptocurrencies as assets with low-returns.