The Crypto Universe “Too Big to Ignore”: BofA Securities


More products beyond Bitcoin, including what BofA analysts have called “altcoins,” short for alternative coins. There are currently over 11,500 of these coins, and three of them – Ether, Cardano and Binance Coin – are the most popular and have exploded in value since the start of the year, ranging from a gain of 365 % for Ether and over 1.100% for Cardona (1,427%) and Binance Coin (1,142%).

Extensive use of the blockchain, the record-keeping technology behind Bitcoin and other cryptocurrency networks, in decentralized finance, digital identity and supply chain tracking applications. Decentralized Finance (DeFi) allows users to access financial products and services, such as loans, borrowings, insurance, and exchanges, without going through a traditional financial institution.

NFTs, unique crypto tokens that exist on a blockchain and cannot be replicated, are a key example of the uses of blockchain digital identity, allowing artists and musicians to retain ownership of their digitized assets and rights. to resell them continuously.

Central Bank Digital Currency Activity (CBDC) has increased significantly, according to BofA. The Federal Reserve plans to launch a review of the benefits and risks of issuing a CBDC in a few days, while Chinese and European central banks are already studying the matter. To date, only five countries have CBDCs, and they are all in the Caribbean. El Salvador adopted Bitcoin as legal tender.

Plans to switch to greener mining. These plans could potentially make crypto assets more attractive to investors and consumers who believe their production uses too much energy for too little benefit and contributes to climate change.

According to the BofA report, Bitcoin production consumes around 91 terawatt hours of electricity per year, more than Finland, which has a population of 5.5 million. (A recent update of the Cambridge Bitcoin Electricity Consumption Index indicates that Bitcoin uses 102.43 terawatt-hours of electricity, almost as much as the electricity consumption (110.7 terawatt-hours) of the Netherlands, which have more than 17 million inhabitants.)

Risks for the growth of digital assets: regulatory and technological

The flip side of these bullish signs for the continued growth of the crypto ecosystem are the regulatory and technological risks facing the crypto universe.

On the regulatory side, there is the crackdown on crypto trading in India and China, which recently banned all cryptocurrency transactions and any citizen from working for crypto-related companies and concerns that US and other governments will need more anti-money laundering and knowledge of your – customer disclosures by DeFi companies as well as larger reserve requirements.

Perhaps more importantly, the United States Securities and Exchange Commission could prevent the formation of crypto exchange-traded funds (ETFs), which crypto enthusiasts crave. (More than a dozen such claims have been filed with the SEC.)

When it comes to technology-related risks, the BofA report lists the possibility that the underlying blockchain technology will not scale efficiently, that software bugs can cause smart contracts to fail, and that hacking or fraud involving current DeFi adopters with limited recourse could cause other potential adopters to revert to doing business with traditional financial institutions.

Other risks associated with the technology include the potential failure of stablecoins indexed to fiat currencies, which could create a liquidity shock.


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