This content has been created by Team Blockchain, an independent platform providing insight and expertise on Blockchain, Tokenomics and the Crypto market.
The real victims of digital assets, whether they be crypto or Central Bank Digital Currencies (CDBC), are plastic credit and debit cards. Fewer people use cash, a trend that COVID-19 has arguably accelerated with retailers/shops refusing to take notes and coins for fear for spreading coronavirus, but credit and debit cards are facing a similar fate of being seen to be no longer required, or even relevant, in our increasingly digital world. Consumers have transitioned from paper money and coins, to online transactions and debit/credit cards, and now on to mobile payments via SamsungPay, ApplePay, GooglePay, WeChat Pay, AliPay and Paypal. Consequently, this dramatic increase in the number of digital wallets is a trend that is predicted to grow, potentially rendering our plastic cards obsolete.
A report from Juniper Research has found that a “total spend via digital wallets will exceed $10 trillion in 2025, up from $5.5 trillion in 2020. The research found this dramatic 83% growth in spend will be fuelled by the heightened adoption of digital payments during the pandemic. Digital wallets have proven themselves as being both convenient and are becoming increasingly capable of both contactless and remote payments. The research forecasts that in 2025, contactless and eCommerce payments will account for 50% of total wallet spend, from just under 36% in 2020.”
There are some very powerful forces which are accelerating the demand for digital wallets:
- NTFs - Instagram celebrities have begun to understand the ability to sell their photos, videos, prose etc directly to their 10millions, and in some cases 100millions, of followers. No need to have to share income with agents, managers etc since all that is required for their fans is a digital wallet in which to store their idols’ creations.
- DeFi - with interest rates at almost zero and in some cases turning negative, the search for higher income investments ‘heats up’. DeFi is tempting to those looking for higher income into the world of yield farming.
- CBDCs - while not all CBDCs will use Blockchain technology, they will require the users of these state-backed currencies to be held in digital wallets.
- Digitalisation securities - we have already seen Luxembourg and Switzerland creating legislation to enable securities i.e., bonds and equities to be issued digitally, without the need for paper documentation. These new digitised securities will also need digital wallets.
- New asset classes - digitisation of IP data, for loyalty schemes will function more efficiently using digital wallets.
- ID - increased likelihood of seeing digital wallet technology being used to enable travel, not holding methods of payment i.e., crypto or fiat, but rather holding healthcare data such as when the holder was last tested negative for COVID-19 or the date and type of last vaccination.
Digital wallets are undoubtedly set to grow and dominate our day to day lives - some will have Blockchain technology at their core, some will hold crypto, NFTs, DeFi tokens and CBDC, while others will hold data and information the likes of which we are only just beginning to contemplate.
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