KEY POINTS

  • Cash is here to stay, according to Deutsche Bank
  • Bitcoin is too volatile to be a reliable store of value
  • Mobile payments will continue to rise in the next five years

German multinational investment bank Deutsche Bank isn't wrong when it said that Bitcoin (BTC) is too volatile to be a reliable store of value. Two years ago, the king of crypto's U.S. dollar equivalent was $11,300; in 2019, it was $3,531; and today, it just reached $9,000. Unless the countless predictions of a $100,000 BTC come true and takes every "hodler" to the promise land, savers would have to board an emotional roller coaster ride if they put their faith on BTC.

The Frankfurt-headquartered bank makes a case for cash in the first of a three-part report about the future of payments. Deutsche bank's research notes how cash has survived despite the innovations and the disruptions it faced over the last century.

The bank believes that the advent of Bitcoin will not rattle, let alone dethrone cash from its position as the primary choice for payment. According to Deutsche, cash is still the preferred store of value for people as it's easier to track. People stock up on it, especially during uncertain times, so the bank sees cash staying for decades to come.

What Deutsche observes is rising are digital payments and it will zap away the plastic card that was introduced way back in the 50s. The next five years will also boost mobile payments to two-fifths of in-store payments in the U.S. (four times its current level), the report states.

As for BTC, Deutsche said it's too volatile. The fluctuations in price that the crypto had in the last three years make it difficult for savers to depend on it as currency. The report also points out how expensive it is to maintain the Bitcoin network regardless of how it makes transactions cheaper.

The bank echoes what founder and co-chairman of Bridgewater Associates Ray Dalio said about Bitcoin in a CNBC interview while in Davos. Dalio, too, thinks that BTC is unreliable and asserted that the popular crypto isn't a medium of exchange nor a store of value.

When it comes to cryptocurrencies in general, Deutsche Bank remarked that they have the potential to be revolutionary for payments, but further experimentation should be conducted before that takes place.

Deutsche Bank The logo of Germany's biggest lender Deutsche Bank. Deutsche Bank and rival Commerzbank are in merger talks that will create Germany's largest bank. Photo: DANIEL ROLAND/AFP/Getty Images