In its first analysis of digital assets and cryptocurrencies, the Bank of America focused on the cryptocurrency market, the publication prepared by this investment bank indicates that the market value of the universe of digital assets stands at more than 2 trillions of dollars, with more than 200 million users; While bitcoin, the most famous cryptocurrency in the world, has a valuation of 900,000 million.
The report is named Digital Assets Primer. The author is Alkesh Shah, Director of Global Strategy for Cryptocurrencies and Digital Assets at Bank of America.
In this sense, they consider that what may be "a completely new asset class" goes beyond the cryptocurrency created by Satoshi Nakamoto and underline that venture capital investments made in the first half of 2021 reached 17,000 billion euros, well above the 5.5 billion for 2020 as a whole. “This creates a new generation of companies to trade digital assets, offerings and new applications across all industries, including finance, supply chain, games and social networks ”, they point out.
In fact, in their opinion "there could be more opportunities than the skeptics expect" and they underline that, in the near future, blockchain technology could be used to unlock a mobile phone, buy shares, houses a fraction of a Ferrari, receive dividends, make loans, save "or pay for a pizza."
An asset that cannot be ignored
For Bank of America the universe of crypto assets has attracted significant attention and has already managed to reach "too large a size to be ignored", so it believes that "it could form a completely new class of assets." However, the investment bank considers some regulatory risks globally, "impacting growth and valuations."
In a recently published report, Bank of America analysts underline that investment in the world of crypto assets has accelerated, through the increased adoption of new applications related to blockchain technology, such as decentralized finance (DeFi), They do not need intermediaries to function or the NFTs, the non-fungible tokens, which refer to digital assets that represent something unique.
NFT achieved $ 3 billion
In their report, Bank of America experts highlight the role of decentralized finance (DeFi) is an ecosystem that allows users to use financial products and services without depending on a traditional financial institution, so that financial services could be provided to part of the 1.7 billion unbanked people that exist in the world through a simple application for smartphones (DApps).
An estimated 14% (21.2 million) of US adults own digital assets and an additional 13% (19.3 million) plan to purchase digital assets by the end of 2021. In particular, the average age of these potential buyers he is 44 years old and 53% are women ».
They also emphasize that NFTs, this special type of crypto token that represents something unique, are changing the way creators and fans relate to each other thanks to the reward delivery and success it is having among the younger generations, such as Generation Y, Millennials and Generation Z, and also among older age groups. According to their data, NFT sales reached $ 3 billion in August, pulverizing the $ 250 million recorded in all of 2020.
In addition, Bank of America highlighted that the change has been noticed by American companies. “Businesses are not running the risk of ignoring digital assets and applications. They are currently actively exploring this new technology and its possible uses. Leading technology companies, banks and others are also adjusting their approach.
Finally, the report singled out Fox (Nasdaq: FOX) as the first major media company to enter the NFT market, with its investment in Creative Labs' Blockchain worth $ 100 million. Additionally, Disney, iHeartMedia and Warner Music also added to the investments for the current NFT projects.
It is urgent to establish the rules
In late September, the Bank of the People's Republic of China (PBOC) effectively banned any activity related to cryptocurrencies, while just a few days ago Federal Reserve Chairman Jerome Powell He was in favor of regulating the cryptocurrency market, but not prohibiting their use.
Increased adoption of cryptocurrencies, new blockchain-based applications, and stablecoins that could be used as money are gaining attention globally.
They point out that the development of policies that regulate digital assets is one of their main risks. "Regulatory uncertainty is the greatest risk in the short term, but regulation can drive greater participation of investors in the long term once the 'rules of the road' for digital assets are established," they consider in Bank of America.