Growing acceptance of digital currencies worldwide accelerated by COVID-19

Picture by Mohamed Hassan

In 2020, the Economist Intelligence Unit conducted a survey to measure the relative acceptance of digital currencies and other digital payment methods, finding that a cashless trend was strong with consumers globally.

In February and March of 2021, a new survey set out to gauge how sentiment has changed in the past year. Results from this year indicate favour for both digital transactions and currencies has risen further.

Over the past 12 months, 27% of survey respondents report that they always (as close to 100% of purchases as possible) use digital payments instead of physical banknotes, coins or credit cards versus 22% in the previous year’s study.

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Examining the metric from the opposite angle—those reporting only very rare use of digital payment options—the rate declined from 14% to 12%, indicating a shrinking holdout for physical cash. Further details on comparative annual results, along with the 2020 survey, can be found at Digimentality 2021, commissioned by crypto.com.     

While there are a variety of ways people can transact digitally—including smartphone apps or digital currencies—the most common form of digital currency consumers recognise is the open-source variety, typically called a cryptocurrency—such as Bitcoin.

Cryptocurrencies remain the most commonly known form of digital currency options; more than half (55%) of consumers in the 2021 survey say they are aware of them even if they have never owned or used one. Despite increased media coverage of CBDCs recently, it was still the least recognized form of digital currency.     

The COVID-19 crisis has contributed to digital currency awareness, with about half of the consumer respondents agreeing that the pandemic has heightened the use case for a cryptocurrency.     

The pandemic had an even more marked influence on institutional and corporate executives, who were tested in a supplementary survey during the same time period; about 76% of executives say COVID-19 has accelerated demand for and adoption of digital currencies.    

The executive survey had deeper questions on how digital currencies play a role in either corporate treasuries or institutional investor portfolios. While a majority of respondents classified a digital currency as something that should be used primarily for transactional purposes (ie settling payments), the most common commercial uses presently appear to be for capital appreciation and asset diversification.          

A key finding in the report, which includes interviews with Henri Arslanian, PwC’s crypto lead, and Mathew McDermott, managing director and global head of digital assets for Goldman Sachs, is corporate and institutional support for the concept of a digital currency playing a role similar to gold in a portfolio.

As a notional “digital gold”, cryptocurrencies can hold similar patterns in terms of limited supply, being authenticatable and dividable, and providing a level of diversity in asset allocation and value storage. However, regulatory, trust and technological-understanding concerns linger.

Jason Wincuinas, the Economist Intelligence Unit editor who spearheaded the report said: “Money is rapidly evolving. Only a few years ago there seemed to be very little commercial or popular support for even the idea of a digital currency and within the past year, we’ve seen several governments announce new plans to create digital versions of their currencies. It’s like a new space race on that level.

“At the same time, we’ve seen interest and trust in cryptocurrencies grow among consumers. Now that we’ve added perspective from some of money’s heaviest users—corporate treasuries and institutional investors—we have a more comprehensive view of how digital currencies might evolve. Sentiment on the institutional side of the scale already seems much higher than expected.”