“[Crypto] is a trend that has barely started — money is the easiest application and the Bitcoin use case started there,” said Bank of America.
The Bank of America Corporation (BoA) has published a research report offering a bullish outlook for the long-term prospects of cryptocurrency.
The report, published on Oct. 4 by BoA subsidiary, BofA Securities, offers a nuanced appraisal of the digital asset sector that highlights innovation taking place within the decentralized finance (DeFi) and nonfungible token (NFT) sectors.
The report asserts that the cryptocurrency sector’s $2.15 trillion market cap is “too large to ignore,” highlighting that the digital asset ecosystem has evolved to encompass “so much more” than just Bitcoin.
The report characterizes the sector as comprising “tokens that act like operating systems, decentralized applications (DApps) without middlemen, stablecoins pegged to fiat currencies, central bank digital currencies (CBDCs) to replace national currencies, and non-fungible tokens (NFTs) enabling connections between creators and fans,” adding:
“For us, digital assets are not about payments per se. They’re about a new computing paradigm – a programmable computer that is accessible everywhere and to anyone and owned by millions of people globally.”
The BofA report noted that venture capital in the crypto and blockchain sector has dramatically increased in 2021, noting that the more than $17 billion invested into the industry during the first half of this year is more than triple the $5.5 billion injected into the sector over the entirety of 2020.
The report also highlighted the recent surging rates of crypto adoption, estimating that as of 221 million users globally had traded cryptocurrency or used a blockchain application as of June 2021 — compared to 66 million in May of 2020.
“The applications built on this new software architecture appear to be growing more quickly than past technologies. […] Anyone in a network can establish a process (application or project) that provides consistency and trust,” the report read.
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Looking at NFTs, BoA states that the booming growth of the sector even caught veteran crypto users by surprise, highlighting that the OpenSea marketplace generated more than $2.5 billion in the first half of 2021.
However, the report warned of the volatility associated with the nascent NFT sector, stating that “heightened risks in this segment […] need to be fully understood before NFTs can achieve true adoption.”