Banks Will Need To Evolve To Survive In An Age Of Cryptocurrencies

In ancient China, small golden or silver ingots were used as currency. Its weight in taels — a weight measurement unit in regions of East and Southeast Asia — determined its value. Now, bitcoin — which has broken its all-time high record yet again, is exceeding US$56,000 in price and US$1 trillion in market value, at the time of publishing — is emerging as modern-day “gold 2.0” — especially in Singapore.

While institutional adoption rages on in the West, large swaths of Asia have expressed more reservations and mixed feelings toward cryptos like bitcoin. Hong Kong is mulling prohibiting retail crypto trading while India is proposing an outright ban on private cryptocurrencies. China has also been cracking down on crypto companies and tightening up its legal grip over crypto. But Singapore’s approach toward cryptocurrency has been markedly different from its regional neighbors in talk as well as in its actions.

Bank of Singapore chief economist Mansoor Mohi-uddin argued in a recent research note that it would be “very unlikely” for bitcoin to replace fiat currencies as a modern-day medium of exchange, as — like gold — bitcoin is “too inefficient to make cross-border payments.” However, Mohi-uddin points out that the most likely role for bitcoin is as an alternative store of value and that it could compete against gold as a safe-haven asset.

Despite such comparisons between gold and “gold 2.0,” bitcoin is not actually all that similar to gold, as its strict digital scarcity, portability and divisibility are factors not present in the physical precious metal. “A gold investor can also be a bitcoin investor and a stock investor can also be a bitcoin investor,” said Eugene Ng, Gemini’s head of business development in Asia Pacific, in an interview with Forkast.News. “Bitcoin is not really competing with gold, but rather it stands on its own.”

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