Don’t expect this to cause another Bitcoin spike, though: Traditional crypto coins aren’t at the heart of increased investment in payment platforms, stored value and collateral that Gartner predicts.
Gartner is predicting good things to come for digital currencies, predicting their use by major enterprises to grow to 20% by 2024. Digital currencies, Gartner said “will be used more in business transactions and grow in overall economic significance in the years ahead.”
investors shouldn’t get too excited, though: Much of what’s driving widespread adoption by enterprises is what crypto enthusiasts have resisted: Regulation and centralization. Gartner IT practice distinguished VP analyst Avivah Litan said that businesses will be using digital currencies “for payment, as a store of value and for the ability to leverage high-yield investments available in decentralized finance applications,” but it’s and central bank digital currencies (CBDCs) that are behind a lot of the growth.
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CBDCs are a relatively new concept that, like traditional cryptocurrencies, are tracked on a blockchain that eliminates the need for an intermediary like a bank or financial exchange to handle transactions. CBDCs aren’t a speculative currency, though: Their value is directly tied to a nation’s form of fiat cash, but are entirely digital.
Think of CBDCs as essentially digital cash: A digital CBDC U.S. dollar will always be worth the same as a physical U.S. dollar. It can be exchanged privately just like a U.S. dollar, but it’s completely digital, and ownership is tracked through a centralized blockchain.
It’s understandable that businesses would avoid getting involved in volatile cryptocurrencies, said Gartner Finance chief of research Alexander Bant. “Anticipation of clearer regulatory guidance, and the advent of CBDCs, now offers CFOs more avenues to pressure-test use cases for digital currencies,” Bant said.
In short, we may be on the cusp of the crypto future many have dreamed of, but decentralization and its accompanying volatility is going to have to be left behind if businesses are going to adopt it.
How to adopt crypto the right way
Along with stabilization of some virtual values, other factors making adoption of digital currency more tempting to businesses include the easy availability of off-the-shelf digital currency solutions, payment network adaptation of distributed ledger technology, asset tokenization and growing need for digital currencies in web 3.0 “metaverse”-type environments, Litan said.
All of those different use cases can invite confusion, which is why Gartner has some very specific recommendations for companies considering digital currency investment, centralized or otherwise: Make sure you have a clear, specific use case in mind.
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“Each primary use case comes with a host of technological, regulatory, legal and strategic considerations … including selecting appropriate service providers and the ability to monitor and react to ongoing regulatory guidance,” Gartner said.
This report could be another reason to start trying to determine your use case, especially early on. If Gartner’s correct, starting your journey now could put you in an elite 20% of enterprise-level companies pushing the envelope on a paper money-less future.