Digital currencies could succeed in developing countries, says Goldman Sachs

Bitcoin and other cryptocurrencies could offer good alternatives to fiat in areas where fiat is inadequately supplied & there are problems of inflation with supply mismanagement of fiat. An example of these areas is sub-Sahara African countries.

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Bitcoin as Money

However, Cryptocurrencies may not be as successful in areas like United States where the U.S. dollar is stable & transaction costs are already low. Goldman Sachs said in an internal report titled “Bitcoin as Money” published on Wednesday by the bank’s strategists Zach Pandl &  Charles Himmelberg

For instance, in Democratic Republic of the Congo, 90 percent of deposits and loans comprise of foreign money. Also, Zimbabwe demonetized its currency in 2015. Bitcoin can also be useful in countries and regions, where governments impose strict rules on use of traditional currencies from other countries according to Goldman Sachs.

The report says the astronomical returns that brought the world’s attention to cryptocurrencies will reduce. If the digital coins become widely accepted form of currency.

“Our working assumption is that long-run cryptocurrency returns should be equal to (or slightly below) growth in global real output—a number in the low single digits,” the strategists said. “Thus, digital currencies should be thought of as low/zero return or hedge-like assets, akin to gold or certain other metals.”

The bank, which has been around for 150 years & formed decades before the Federal Reserve, is influential globally. It is not just influential in U.S. but also world over where its employees occupy highest offices in governments.  

Also Read: Dutch researchers mining cryptocurrencies with body heat

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Qadir AK

Qadir Ak is the founder of Coinpedia. He has over a decade of experience writing about technology and has been covering the blockchain and cryptocurrency space since 2010. He has also interviewed a few prominent experts within the cryptocurrency space.

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