Bank of America optimistic about prospects for DeFi and NFT
The digital asset industry could become "one of the most exciting markets" in the coming years. That's the assessment made by analysts at the financial conglomerate Bank of America in a research report.
In their view, the "digital asset universe" with a capitalisation of over $2 trillion and more than 200 million users is "too big to ignore".
The experts noted that bitcoin, with a combined value of around $900 billion, has an important place in it, but the ecosystem is much broader. Among its component parts, they named "tokens that run as operating systems, decentralised applications (dapps), fiat-linked stablecoins, CBDC and NFT".
The researchers highlighted that Ethereum has provided a public platform for smart contracts, enabling the development of hundreds of dapps capable of transforming finance, insurance, legal services and many other areas.
"Digital assets that enable the creation of apps gain the most value. We believe there may be more opportunities than sceptics think," the report says.
Bank of America experts named decentralised finance (DeFi) and NFT as the most innovative areas. Thanks to dapps, the DeFi sector can "provide financial services to the majority of the world's 1.7 billion unbanked people simply through a smartphone".
"NFTs are changing the way authors communicate with fans and get compensated," the researchers observed.
The sphere's rapid growth came as a surprise to many traditional marketers - in August, NFT sales on the OpenSea markerplay alone exceeded $3bn, compared to a combined $250m for all of 2020, the report authors reminded us.
Bank of America analysts see regulatory uncertainty as the main risk in the short term to the widespread adoption of digital assets. Some governments, like those in China or India, prohibit trading in bitcoin and other cryptocurrencies to some extent, they reminded.
The inevitability of CBDC means that in other countries, too, private digital assets could become a target for regulators who see them as risks to payment and credit systems, the researchers believe.
"In our view, regulatory uncertainty is the biggest short-term risk, but regulation could encourage greater investor engagement in the longer term once 'rules of the road' for digital assets are established," the report's authors said.
Recall that in March 2021, Bank of America said bitcoin was useless as a savings vehicle and that its only value was growth.
In July, the conglomerate set up a digital asset research group and opened up trading in digital gold futures.
Ahead of the legislation to legalise bitcoin in El Salvador coming into force, analysts at the bank said the move could bring a number of benefits to the country. A contrary view, for example, was expressed by JPMorgan and economist Steve Hanke.