Saturday, April 20, 2024

20% of Large Enterprises Will Use Digital Currencies by 2024

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STAMFORD, Conn. — A new report says that by 2024, 20% of large organizations will use digital currencies for payments, stored value, or collateral.

The widening adoption of digital currencies will be partly driven by the healthy environment of service providers and off-the-shelf solutions available to large enterprises that have identified a specific use case for digital currencies, according to the market research firm Gartner last month.

“Increasing mainstream acceptance of cryptocurrencies on traditional payment platforms and the rise of central bank digital currencies (CBDCs) will push many large enterprises to incorporate digital currencies into their applications in the coming years,” said Avivah Litan, distinguished VP analyst, Gartner’s IT practice. 

“Digital currencies will be primarily used by these organizations for payment, a store of value and the ability to leverage high-yield investments available in decentralized finance (DeFi) applications

Several other factors could make digital currency applications more palatable to CFOs in the next 12-24 months, including hedging against the high inflation, increased regulatory clarity, improvements in energy usage, and adoption by employees, consumers, and suppliers, according to Alexander Bant, chief of research, Gartner’s finance practice.

“We have noticed an uptick in interest in digital currency and blockchain applications among CFOs since the start of the year,” Bant said. “While volatility of cryptocurrencies remains a concern, anticipation of clearer regulatory guidance, and the advent of CBDCs, now offers CFOs more avenues to pressure-test use cases for digital currencies.

Organizations should first clarify specific use cases for digital currencies before evaluating appropriate IT stacks to incorporate them within the enterprise.

“There has always been theoretical appeal in the use of blockchain and digital currencies for CFOs as a means to lower costs, increase transaction processing speed, reach new global customers, move toward continuous accounting and auditing, and create an error-free and fraud-free environment,” Bant said. 

Each primary use case comes with a host of technological, regulatory, legal, and strategic considerations for both CFOs and applications leaders to assess, including selecting appropriate service providers and the ability to monitor and react to ongoing regulatory guidance.  

“Among the primary use cases for digital currencies that we have identified, there will be no need for most organizations to develop a customized blockchain application stack,” Litan said.

“Many large banks, payment platforms, institutional digital asset custodians and wallet providers have already done the heavy lifting in this area, which should provide large enterprises with a minimum of friction in deploying their own digital currency applications.”

Bant added that in 2022, CFOs will “rapidly up their knowledge” on digital assets, currencies, and other blockchain applications. 

“We are starting to see some Fortune 500 companies map out scenarios for how they will respond if a country or supplier moved to doing business with only digital currency and what steps they would take as a result,” Bant said.

Gartner clients can read more in: “Predicts 2022: Prepare for Blockchain-Based Digital Disruption.”

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