Citi GPS, an operation operated by multinational financial outfit Citi, has come out with a report that looks at the institutional environment, enabling infrastructure, solution provisioning and propensity to adopt digital money to measure the readiness for digital money in a number of countries. The report also quantified the benefits of digital currency adoption for businesses, individuals and governments.
The countries that are the most “materially ready” are the western countries, suggests the report. In these countries Bitcoin technology will help merchants and individuals significantly.
Not only does Bitcoin bring down the costs associated with transactions, but it’s estimated that “the efficiency gains from digitization [are believed] to be approximately USD $340 billion in the U.S.”
This is a result from the reduction of costs related to theft, security and transit of traditional currency.
Late adopters in these “materially ready” countries might not benefit from bitcoins price increase but will benefit from the reduced costs of financial services.
Currently, trusted 3rd party intermediaries substantially raise the cost of doing business. These services are usually performed by lawyers, accountants, brokers and more business professionals that charge high rates. Since the western world’s population is aging, there will be a demand for financial services, which would normally drive up the price. Bitcoin will help keep the financial industry in these countries competitive and open up these services to more people.
What’s interesting is the countries deemed to be the biggest potential markets for bitcoin. It does make sense because China, India, Mexico, Philippines and Kenya are considered developing markets, which is exactly why these markets are attractive for Bitcoin to be used for remittance payments and as a financial tools for the unbanked.
But will their readiness prevent adoption?
The report studied these two variables and found that “60%-65% of adoption can be explained by the index variables.”
The report also stated the benefits governments would receive from adoption. The benefits include moving more money into the formal economy, increasing tax collections, increased efficiency in transfer payments and financial inclusion.
The report concludes with this statement:
“Digitization in general and adoption of digital money solutions in particular, is not a question of ‘if’, but ‘when’. Doing nothing simply means allowing the system to develop dysfunctionally, in fits and starts. It also means delaying the tremendous socio-economic benefits that adoption can bring. Inaction is not an option. There is too much at stake.”