Digital Currencies Are The Only Usable Digital Assets Currently, Says PwC
A PwC Switzerland executive - Roland Stadler - published a report on Tuesday, July 31, stating that out of all the types of digital assets available, digital currencies are the only ones that can be reasonably used in the current scenario.
Stadler, who is a Senior Manager and Data & Analytics Specialist at PwC Switzerland says that there is a difference between “digital assets” and “currencies”. He says that only a few can be considered as currencies while classifying the digital assets into three categories: utility tokens, security tokens and currencies like Bitcoin (BTC).
Stadler argues that Bitcoin-like digital tokens can be considered as a payment network as well as a payment instrument in equal regard that can be used without involving any central body. Utility tokens, on the other hand, act as a “fuel” for using the software or a service. Stadler gives the example of ETH tokens to be considered as Utility tokens as they can be used for Ethereum-based smart contracts.
The third type of digital assets - security tokens - are nothing but digital securities like shares in companies that can generate future profits from a project. The security tokens can be considered as “tricky” from regulatory perspective as they are subjected to the same regulatory requirement as that of a company’s IPO.
From all these analysis, Stadler concludes that digital assets in the form of “currencies” can only be considered to be useful in spite of their speculative nature. Stadler says that BTC is a long-time investment with a larger acceptance among the global financial community.
He said: “Technical stability plays a particularly important role. Priority is given to security and resistance to external influence through conservative technological development … With fees amounting to just a few pennies, Bitcoin can bring significant benefits in terms of costs in the field of international trade, where traditional payment transactions can incur very high transaction fees.”
At the same time, Stadler also highlights the risks associated with utility tokens and security tokens. He says: “even for above-the-board projects,” adding that, “given the current hype surrounding blockchain technology, the proportion of confidence tricksters is likely to be significant.”
Stadler says that from a holistic perspective - economic, technological and sociological, BTC presents big opportunities for innovative models. Smart contracts, he believes, are real-world assets and will have a larger impact in the future.