U.S. banking giant Citigroup believes that mass adoption is six to eight years away and will be driven by central bank digital currencies (CBDCs) and the tokenization of financial, gaming and real-world assets, according to the lender’s latest blockchain report.
Citi compared blockchain innovation to the early days of gas-powered vehicles or digital cameras and said that the world usually does not recognize the value and benefits of disruptive technologies at first. This factor is compounded by the nature of blockchains, which are a “backend infrastructure technology with no prominent consumer interface,” unlike automobiles and cameras.
However, Citi believes that the mass adoption of blockchain tech will happen in the near future as it starts to establish itself in real-world use cases. Citi said:
“Momentum on adoption has positively shifted as governments, large institutions, and corporations have moved from investigating the benefits of tokenization to trials and proofs of concept.”
Citi’s recipe for mass adoption
According to the research report, mass adoption will happen when more than a billion people are using blockchain technology without knowing they’re using it.
The lender believes this will most likely happen through CBDCs as more and more governments start implementing digital currencies in their economies. As of March, more than 20 central banks plan to issue or have already issued a digital currency — giving almost 2 billion people access to digital money in the coming years.
Citi projected CBDCs to hit a combined market cap of $5 trillion by 2030 in major economies and said that roughly 50% of them would be linked to distributed ledger technology.
Citi noted that CBDCs will allow people to interact and experiment with digital currencies in a relatively secure environment due to state-backing, which is a good thing for the overall adoption of blockchain tech despite most central banks not using it for their CBDCs.
Social media payments and gaming
Citi said that beyond CBDCs, blockchain-based social media payments and the tokenization of gaming assets will play a major role in driving the adoption of blockchain technology among the general public.
Almost every social media platform is currently in the process of enabling digital payments and some — like Telegram and WhatsApp — have made considerable progress.
Telegram recently launched blockchain-based payments for USDT, allowing users to send and receive the stablecoin via messages. The app has been a stalwart proponent of cryptocurrencies and blockchain payments almost since its inception.
Meanwhile, the tokenization of in-game assets is expected to drive adoption among more than 3 billion gamers worldwide. However, web3 games need to be as good as non-web3 games for this to happen, according to the report.
Citi said that gamers don’t care about the technology being used in their games, they only care about the quality of the game and will easily switch to a web3 equivalent of their favorite if one exists. The lender noted that even if only a fraction of the gaming community adopts blockchain-based games it will still result in a significant increase in adoption numbers.
“With over 3 billion gamers worldwide today, we are likely to see nearly 50 million to 100 million adopt games with some element of Web3 or blockchain by 2025.”
Additionally, the lender believes that the tokenization of financial and real-work assets is expected to grow 80x in private markets over the coming years and could also become a significant driver of mass adoption.