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Global interest in cryptocurrencies is growing

The World Economic Forum (WEF) looks at 4 main factors in the market that drive the adoption of cryptocurrencies.

Central bank policy and macroeconomic instability

The World Economic Forum (WEF) states that there are four main factors that are causing a worldwide wave of cryptocurrency adoption. In its new report, the independent international organization argues that interest in cryptocurrencies is growing due to a combination of several economic drivers. The first they describe is the policy of central banks around the world. This, together with hyperinflation and macroeconomic instability, leads to the devaluation of traditional FIAT currencies. All this, of course, combined with concerns about the ongoing COVID-19 pandemic.

These pressures cause that an increasing number of large companies tend to keep their funds, or part of it, in cryptocurrencies. And we are not talking about any small companies, but about real giants - Microstrategy, Tesla, Square, and others. In general, it can be said that the institutional demand for cryptocurrencies is growing. According to the latest weekly CoinShares report about digital asset fund flows, there has been an inflow of $ 98 million in institutional capital for crypto investment products. Of that, up to $ 59 million went to Bitcoin (BTC) and the rest was shared mainly between Ethereum (ETH), Solana (SOL), Cardano (ADA), Polkadot (DOT), and Ripple (XRP).

Rocket launch to the moon as a Bitcoin price increase concept Rocket launch to the moon as a Bitcoin price increase concept, Source: shutterstock.com “Bitcoin saw inflows totalling US $ 59 million, marking a potential turnaround in sentiment amongst investors. This is the first inflow following an 8-week spell of outflows, the longest endured by any digital asset investment product. ” CoinShares report

Cryptocurrencies do not allow illegal financial activities

More often than not, we hear the exact opposite statements, but they usually come from people who do not understand or do not want to understand cryptocurrencies. In this respect, the WEF rightly argues that cryptocurrencies offer a unique chance to create a more transparent financial system. Cryptocurrencies can even assist regulators that are actively seeking to move transactions from the informal to the formal economy.

“Regulators have highlighted the pseudonymous and borderless nature of cryptocurrency systems as potential money laundering and terrorist financing risks. Yet, illicit activity is significantly less than in the traditional financial system, comprising just 0.34 % of all cryptocurrency transactions. " World Economic Forum report

Stablecoins - a much more effective medium of exchange

Stablecoins are another important factor identified by the WEF in their report. They compare this type of cryptocurrency with classical national currencies. In principle, they claim that anyone who understands how their system works must see the undeniable benefits of stablecoins. It should also be noted that some countries are already working on similar systems.

“The market cap of USD Coin (USDC), for instance, has passed $ 25 billion with a compound annual growth rate of more than 6,100 %. Such traction has even inspired Sweden to pivot its planned e-krona in order to compete with such cryptocurrencies and central bank digital currencies (CBDCs). ” World Economic Forum report

Wide range of cryptocurrency applicability

It is this aspect that the WEF chose as the last of the four and could theoretically be the most important. This is because various digital assets offer a huge number of ways to apply them in real life. An excellent example is the rocket-growing DeFi industry, which is now literally writing the future of the financial world. Evidence of this is the hundreds of different projects around the world that are developing solutions that will soon make our lives easier. The efforts of cryptocurrencies to improve their ecosystems were also mentioned in a positive direction.

World Economic Forum (WEF) World Economic Forum (WEF), Source: shutterstock.com “Such improvements are also propelling DeFi (decentralized finance) application usage. The rapid proliferation and maturation of these innovations is in large part due to the open-source architecture and global developer communities that undergird crypto networks. ” World Economic Forum report

The World Economic Forum is an impartial institution that (unlike others) is not interested in distorting the data and their interpretation. If you compare these statements with the statements of the representatives of countries or financial institutions, you will probably notice considerable discrepancies. Why?

Slavomír is working in the field of cryptocurrencies since 2018. As a Co-Founder and Chief Marketing Officer of Dollero Technology, which is currently developing a crypto exchange ...

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