Monday, May 16

Big Business Starts Looking To Crypto To Hed Inflation, But Use Cases Are Missing

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Spanish inflation stood in November above 5.5% annual. The United States is at its peak of the last 39 years and practically the entire globe is in the same situation. Uncertainty – caused by covid, the supply crisis or energy problems – is at a peakwidespread and constantly increasing. There is no doubt that we are facing a propitious scenario for many companies to seek alternatives to traditional financial systems, with cryptocurrencies as a particular lifeline.

So much so that the analysis firm Gartner estimates that 20% of the world’s largest companies will use cryptocurrencies by 2024. It is an ambitious prediction, never before seen around currencies considered speculative. However, the introduction of this technology in many of the traditional payment platforms and, especially, the irruption on the scene of central bank digital currencies, are beginning to break down walls of fear and mistrust in high offices.

“These companies will mainly use digital currencies to manage payments, to have a store of value and to take advantage of high-yield investments available in decentralized finance applications,” adds analyst Avivah Litan.

More pragmatic is his colleague at Gartner, Alexander Bant: “We have seen an increase in interest in digital currency and blockchain applications among CFOs since the beginning of the year. cryptocurrency volatility remains a concern, the anticipation of clearer regulatory guidance, and the advent of central bank cryptocurrencies offer CFOs more avenues to test digital currency use cases“.

And that is the key: everything is in a testing phase, of pilots in search of use cases that justify the use of cryptocurrencies. Because it is one thing to be interested in consumer demand or the inevitable lure of high-yield speculative investments… and quite another to justify the financial strategy of a large company based on those principles.

Waiting for the use cases

In fact, the same Gartner experts recommend that “organizations clarify the specific use cases of digital currencies first before evaluating the technological needs to incorporate within the company”. They also add that each use case “comes with a series of technological, regulatory, legal and strategic considerations for both CFOs and business leaders to assess.

To date, remember from this house of analysis, what exists is a search for alternative formulas for protect your accounts from the current high inflation. The researchers do not ignore that regulatory improvements or improvements in the use of energy by the blockchains that support cryptocurrencies also help their adoption. But that final step is missing: find concrete use cases.

There has always been a theoretical appeal in the use of blockchain and digital currencies for CFOs. as a means to reduce costs, increase transaction processing speed, reach new global customers, move towards continuous accounting and auditing, and create a system free of errors and fraud,” admits Bant, who is optimistic about a near future in which we can “see a path in which the use of digital currencies will be potentially more predictable and stable”.