According to Allianz Chief Economic Advisor Mohamed El-Erian, countries are fast moving away from conventional cash, and in the future governments will issue their own ‘officially sanctioned’ cryptocurrencies.
While some countries are quickly incorporating an increasing amount of cashless transaction solutions, El-Erian believes that this wider-scale implementation will be gradual over years or decades.
“Is there a role for cryptocurrency in the future? Yes, but critically, officially sanctioned, that's very different. It's not something that we're going to see in the next three to five years … because people's habits and people trusting in the new medium and change doesn't happen overnight.”
The economic advisor referred to Sweden as an example of the sort of payments that he claims will dominate transactions in the future. Sweden, according to CNBC, saw about 2 percent of the total value of transactions consist of cash, and a decline to less than 0.5 percent is expected by 2020.
Other countries are not far behind. The United States’ Federal Reserve, for example, measured that 9 percent of the total value of transctions consisted of cash in 2015, a small amount when compared to credit cards and online payments.
This year has already seen countries like Russia, Venezuela and Iran make moves towards the concept of ‘officially sanctioned’ government-backed cryptocurrencies. Russia came close to introducing its own CryptoRuble, while Venezuela launched its oil-backed cryptocurrency, the Petro, earlier this year.
Iran, a country that was seemingly embracing bitcoin last year, has recently turned its back on decentralized cryptocurrencies, and started developing a local cryptocurrency whose “experimental model” is ready.
El-Erian added that cash still serves an important, although diminishing, role around the world. As covered by CryptoGlobe, the Swiss government is currently looking into the risks and benefits of issuing a state-backed “e-franc,” which would presumably use blockchain technology.