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Embracing Digital Currencies

By Frank-Jürgen Richter

June 21, 2025

Digital currencies are reshaping the financial landscape. Digital currencies are forms of money that exist only in electronic form and can be managed and transacted only over the internet. There are two types of digital currencies i.e., cryptocurrencies like Bitcoin and Central Bank Digital Currencies (CBDCs) which are digital versions of a country’s fiat currency. Cryptocurrencies are decentralized, while CBDCs are centralized, meaning they are issued and regulated by a central authority.

Volatility of cryptocurrencies make them both an opportunity and a risk. This has affected global markets and financial systems in many ways. Take the case of Bitcoin which has enabled cheaper, quicker, and easier to track transactions without the need of a third party. Its underlying blockchain technology has enabled movement of secured transactions over networks without the need for paying high fees. But cryptocurrencies also have downsides such as its extreme price volatility, making it an unviable medium of exchange.

Nevertheless, it has prompted several governments to develop their own digital currency which are CBDCs, offering more potential of safer, and a more secured currency to enable financial inclusion. Several countries are already experimenting with their own version of CBDCs like China, Thailand, Singapore, UK, US, EU etc. Upside to CBDCs is its potential to make payments efficient and reduce settlement times. Meanwhile, for consumers and businesses it presents a risk-free digital alternative to cash, extending financial inclusion to underserved areas.

With the launch of Nigeria’s eNaira in October 2021, it has enabled easy account opening without the need for documentation. Furthermore, eNaira also enables people to transact offline using USSD code over mobile phones. Since its launch in October 2021, eNaira has onboarded 270,000 users, recording transactions worth Nigerian Naira (NGN)4 billion (US$10 million).

Digital Currency Use Cases

Businesses are increasingly gravitating towards using Bitcoin and other crypto and digital assets for investment, as well as operational and transactional purposes. As of early 2024, more than 6,000 businesses globally accepted Bitcoin as a means of payment.

The Bitcoin payment ecosystem that is made up of miners, merchants, and consumers is expected to reach US$1.83 trillion by 2030, growing at a CAGR of 20.1% from 2024. Many global brands such as PayPal, Microsoft, Starbucks, McDonalds, and smaller businesses like sushi restaurants, auto repair shops, and convenience stores are accepting Bitcoin payments. They are doing this to take advantage of lower transaction fees, no currency exchange rates, and faster settlements. Meanwhile, consumers are using various ways to spend Bitcoin on products and services.

Not just companies, but major institutional investors are also including Bitcoin as an integral part of their portfolios. In early June 2025, Blackrock, one of the world’s largest investment company purchased 9,000 to over 58,000 Ethereum (second-largest cryptocurrency after Bitcoin) valued at between US$23 million and US$61 million. The investment giant has also launched its second publicly traded Bitcoin product in Europe on March 2025, after it had garnered record success in its US-listed iShares Bitcoin launched in January 2024.

Well-balanced Portfolio

Investors cannot risk investing only on a diversified mix of stocks and bonds anymore, due to increased inflation impacting their returns, which has considerably reduced in comparison to the last four decades. Investing in the crypto asset class may help investors overcome some of the present portfolio construction challenges. From a risk/return perspective, it helps investors invest in a broad set of crypto assets. This allows investors willing to take higher risk on certain crypto asset class, potentially get higher returns. And because of its nature, adding a crypto also translates into improved returns for the portfolio overall.

Investors should also be open to the idea of investing on a fair mix of crypto assets in their portfolio. This should be payment currencies like Bitcoin as an alternative to traditional money; stablecoins like Tether and USD Coin to offer relative price stability; utility tokens; infrastructure tokens; meme coins and governance tokens.

Strategies to Leverage Digital Currencies

Investors should adopt several strategies to manage risks while leveraging the growth potential of digital currencies:

HODL – Short for “hold on for dear life”. This strategy involves buying digital assets and holding on to it for a longer time, expecting higher returns in the future.

Dollar cost averaging – This is a strategy where a pre-determined amount of money is invested in buying digital assets at regular intervals for a more passive style of investing.

Buying the dip – This strategy involves buying more digital assets when its prices drop with the assumption to benefit from it when its price increases.

 

This is one of the agendas being discussed at our upcoming Horasis Global Meeting, which is in its 10th edition. Scheduled between 7 to 10 October 2025 in São Paulo, Brazil, the meeting will draw together opinions and experiences of global leaders from various backgrounds to find cooperative frameworks to our present challenges.

Photo Caption: Volatility of cryptocurrencies make them both an opportunity and a risk.