The World Economic Forum Identifies Four Factors Fueling Global Interest in Cryptocurrencies

According to the World Economic Forum (WEF), four major causes are driving a global tidal wave of cryptocurrency adoption.

According to a new analysis from the independent international organisation, interest in cryptocurrencies is increasing as a result of a variety of economic reasons.

“Central bank policies, hyperinflation, and macroeconomic instability contributed to the volatility and devaluation of local fiat currencies in relation to other global currencies prior to and during the COVID-19 epidemic. As a result, people and businesses such as Microstrategy, Tesla, and Square have begun to own bitcoin and other digital currencies. It has also sparked increasing user activism and awareness among lawmakers from the United States to El Salvador who are developing new cryptocurrency policies.”

Additionally, the WEF adds that remittance fees are consuming a higher-than-ideal proportion of transactions, which may explain the increased interest in P2P systems featured in many cryptos.

Another reason fuelling interest in crypto assets is the development and rapid scalability of stablecoins as a significantly more efficient means of trade.

“For example, the market capitalisation of USD Coin (USDC) has surpassed $25 billion, growing at a compound annual growth rate of more than 6,100 percent. Such traction has prompted Sweden to restructure its proposed e-krona in order to compete with cryptocurrencies and central bank digital currencies (CBDCs).”

Finally, the WEF emphasises the breadth of varied applications that various digital assets provide, as well as how an endeavour to be more environmentally friendly and energy efficient is leading people to turn their attention to the crypto markets.

“Such advancements are also increasing the adoption of DeFi (decentralised finance) applications. The rapid spread and development of these breakthroughs is owed in great part to the open-source design and global developer communities that support crypto networks.”

Additionally, the WEF notes that cryptocurrencies do not facilitate illicit financial activities while giving the possibility of establishing a more transparent economic system.

“Regulators have emphasised cryptocurrency systems' anonymity and border lessness as potential money laundering and terrorist financing hazards. Nonetheless, criminal activity is far less prevalent than it is in the traditional banking system, accounting for only 0.34 percent of all cryptocurrency transactions.

Cryptocurrencies can facilitate transparency and give a chance for policymakers aggressively pursuing the formalisation of the economy.”

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