It is encouraging to see financial institutions like Citibank closely examine the potential of cryptocurrencies, and in particular Bitcoin, as a global form of currency. With institutional investors having “arrived” and retail investors jumping into the ongoing crypto bull market, it is not surprising to see increased and serious attention being focussed on the role of Bitcoin and cryptocurrencies by multinational organisations.


In its report published on March 1, 2021 (available here) Citibank posits that Bitcoin’s core properties (immutability, transparency, decentralisation, etc.) could see it become a “currency of choice” for international trade in around seven years' time as perceptions change. The report maps the evolution of Bitcoin from a form of payment to its current function as a store of value which in the future could be used to simplify international trade processes. The authors of the report argue that a decentralized cryptocurrency may be advantageous to a central bank digital currency because “no government or outside entity can take steps that might affect the supply of the trade currency, helping to decouple trade from political considerations.”

The Citibank report cites, inter alia, Bitcoin’s low transaction speeds, custody issues and ESG considerations arising from bitcoin mining as being headwinds to greater functional adoption, nonetheless concluding that Bitcoin is at “the tipping point of its existence” noting that its evolution will have wide-ranging repercussions.


In my view, whilst Bitcoin - and in the future other cryptocurrencies like Ether which are taking on more of Bitcoin’s ‘store of value’ narrative - could be included in a basket of global reserve currencies, the more profound repercussion that stems from the creation of Bitcoin is the technological infrastructure inversion that distributed ledger technology can bring to our lives and global society. The use cases of the technology extends far beyond hard money. The application of the technology from an infrastructure inversion perspective (as explained by Andreas M Antonopolous and referenced here) include: 


(i) self-sovereign identity management;


(ii) value (in a broader context that money) creation, recognition and transfer;


(iii) transactional simplification;


(iv) trustless verification;


(v) IoT, amongst many others.


The future is arguably so much more exciting and boundless when thinking of Bitcoin’s underlying technology in this context as opposed to simply as a new form of currency, but credit to Citibank and other similar organisations for bringing this discussion to the fore.