Whether you know it or not, everybody you know will be using cryptocurrency. It is inevitable. Your mom, your dad, brother, sister and friends will all be using cryptocurrency.
But it won't be in the way that you think.
It's not like everyone will be using Bitcoin or Ethereum.
The current fiat financial system is changing and the paper money we have been using, including coins and cash will be eliminated and will be replaced by a digital currency.
While this may be difficult to imagine, the process is already in place and this transition may offer one of the greatest investment opportunities we have ever seen in the cryptocurrency market.
Every country which has a central bank currency (like the US dollar) will replace its existing monetary system with a digital currency, known as a Central Bank Digital Currency (CBDC) and paper money will cease to exist.
U.S. to Adopt a CBDC
The much anticipated executive order on cryptocurrencies was released by the Biden administration a few days ago. Officially titled, Executive Order on Ensuring Responsible Development of Digital Assets is an outline of the government-wide strategy pertaining to the use and administration of cryptocurrencies, justified by consumer protection, financial stability, national security and even climate risk.
Of significance, is the mention of the urgency on research and development of the United States CBDC.
The development and implementation of CBDCs isn't anything new - according to this PwC report, more than 60 central banks have been exploring this idea going back to 2014.
However, this is the first time a public announcement pertaining to the development of a U.S. CBDC has been made by the current administration.
It's not just the U.S. - It's a Global Initiative
The adoption and use of a CBDC isn't just for the U.S. This is a global initiative that will replace the existing financial system, financial payments (SWIFT), domestic and cross-border payment systems.
For these systems to operate, they need to follow a common standard, which has already been developed and this is known as ISO 20022.
What is ISO 20022
ISO 20022 is the communications standard for the international financial sector and the standard adopted by SWIFT, the current mechanism for international money transfers.
It is expected that the existing SWIFT system will also be replaced by a digital currency that follows the ISO20022 standard.
Which digital currency would this be?
At the time of writing, there are only 6 cryptocurrencies that fulfill this standard:
- Ripple (XRP)
- XDCA (XDC)
- Stellar Lumens (XLM)
- XDC Networks (XDC)
- IOTA (IOTA)
- Algorand (ALGO)
Of these 6 cryptocurrencies, only two are also members of the ISO20022 standard, which are Ripple (XRP) and Stellar Lumens (XLM).
However, this list isn't exhaustive, there are also three other cryptocurrency projects looking to gain compliance which include Hedera (HBAR), Cardano (ADA) and Quant (QNT).
Biggest Investment Opportunity of all time?
The SWIFT electronics payment system currently processes over $5 trillion dollars worth of transactions daily, dwarfing the existing cryptocurrency market.
If the SWIFT system is replaced by any of these approved ISO20022 cryptocurrencies or as a component central bank digital currency, the transaction value of the financial markets would completely dominate the current cryptocurrency market making Bitcoin's market capitalization a drop in the bucket.
Those cryptocurrencies chosen to become part of this system will also likely see massive gains, the likes we have never seen before.
When the entire world's transactions are transacted through a handful of cryptocurrencies, it will have a massive impact on its market value.
We are certainly living in interesting times and with world governments looking to take their central banking to a digital currency, those cryptocurrencies which are ISO20022 approved are the most likely candidates for adoption as part of this system.
Whether one or all of these cryptocurrencies will be used is still not known, but the impact on the cryptocurrency market and the massive increase in the market value of these cryptocurrencies would be tremendous.
The international payments system is a multi-trillion dollar-a-day industry and likely the cryptocurrencies which become part of this system will have the largest market cap we have ever seen, dwarfing all other cryptocurrencies.
Personally, I am very bullish on XRP being the main contender and participant in this new system, but I will leave this for a separate report.
Until the next report,