The cryptocurrency industry is on the brink of a breakthrough, with Citi suggesting that mass adoption will soon be enabled by central bank digital currencies (CBDC) and tokenization of real-world assets. According to the leading bank's latest report, "Money, Tokens, and Games: Blockchain's Next Billion Users and Trillions in Value," the widespread use of CBDC and tokenization is estimated to add up to $5 trillion and almost $4 trillion in value by 2030 respectively.

CBDC is an alternative form of digital payments compared to cryptocurrencies like Bitcoin or Ethereum, and can be purchased with a fiat currency like the dollar or the pound. Citi's future of finance lead Ronit Ghose believes the surge in CBDCs will come to fruition by the end of the decade. However, he further stated that while the technology behind them could be blockchain-based, it could also come in other forms such as distributed ledger technology.

The emergence of CBDCs as well as tokenization provides numerous advantages, including an interoperable payment instrument, saving time and money on intermediaries, and give an advantage to developing economies. Unfortunately, with the positives comes the negative, such as the loss of user privacy and withdrawal of deposits from small banks, among other potential issues.

Tokenization may have a more significant role in propelling the industry forward, asserted Citi. The report believes tokenization of traditional financial assets could expand 80x within private markets and reach a cumulative value of $4 trillion by 2030. This is possible due to a number of merits, including disintermediation through financial markets, composability with cryptos as well as the introduction of a "golden-source infrastructure" that allows for different asset classes on the same network.

While these advancements are great for the cryptocurrency sector, a few challenges still need to be addressed before they are fully embraced. The most prominent of which being clear regulatory grounds, as well as any objections raised by those in the financial industry who may lose their job due to the effectiveness of the technology.



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