World’s largest bank ICBC praises the evolution of Bitcoin, Ethereum as innovative financial assets World’s largest bank ICBC praises the evolution of Bitcoin, Ethereum as innovative financial assets
ICBC compared Bitcoin to gold and said Ethereum has established itself as "digital oil" capable of powering myriad applications across the web3 ecosystem.
2 min read
Updated: Jun. 10, 2024 at 11:18 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
The world’s largest lender, Industrial and Commercial Bank of China (ICBC), recently published an in-depth analysis highlighting the rapid evolution and growing diversity in digital currencies, where it compared Bitcoin to gold and deemed Ethereum “digital oil.”
The report emphasizes the human capacity for imaginative belief, as noted by historian Yuval Noah Harari, as a driving force behind the exponential growth in digital currency types and applications.
VanEck head of digital assets research Matthew Sigel noted:
“Chinese SOE banks keep writing love letters to Bitcoin and Ethereum.”
The ICBC report outlines the divergent development paths of various digital currencies, each addressing unique needs within the financial ecosystem.
The love letter
According to ICBC’s report, market demand has fueled innovation in the digital currency sector, from the birth of Bitcoin (BTC) to advancements in Ethereum (ETH) and the exploration of central bank digital currencies (CBDCs).
ICBC said that Bitcoin has managed to retain a scarcity similar to gold through its mathematical consensus mechanism. The flagship crypto has resolved issues related to divisibility, authenticity verification, and portability. The report added that despite Bitcoin’s waning monetary attributes, its status as an asset is solidifying.
Meanwhile, Ethereum provides “technical power for the digital future” and is establishing itself as “digital oil” capable of powering myriad applications across the web3 ecosystem.
Ethereum, distinct from Bitcoin, incorporates Turing completeness through its proprietary programming language, Solidity, and its virtual machine, EVM.
This feature allows developers to create and manage complex smart contracts and applications, positioning Ethereum as a critical platform for DeFi and NFTs. The report also acknowledged Ethereum’s potential to extend its influence to decentralized physical infrastructure networks (DePin).
Despite the potential, Ethereum faces several practical challenges, including security vulnerabilities, scalability issues due to high computational demands, and significant energy consumption.
Ethereum developers are exploring various solutions to address these challenges. The introduction of the Proof of Stake (POS) consensus mechanism and sharding technology in the Ethereum 2.0 upgrade aims to enhance network throughput and sustainability. Additionally, developers are working on Layer 2 solutions such as state channels, side chains, and rollups to improve scalability.
Stablecoins and CBDCs
The report also highlighted the crucial role of stablecoins in bridging the gap between the digital currency market and the real world. Stablecoins, which peg their value to traditional assets like fiat currencies, offer stability in the volatile crypto market.
ICBC said that stablecoins facilitate seamless transactions and provide a reliable store of value, making them an essential tool for everyday financial activities and a bridge for integrating digital currencies into the global financial system.
Furthermore, CBDCs represent a significant innovation in the modern monetary system. By digitizing fiat currencies, central banks can improve the efficiency of payment systems, reduce transaction costs, and enhance the effectiveness of monetary policy.
According to the report, CBDCs can streamline cross-border transactions, reduce reliance on intermediaries, and offer greater financial inclusion by providing access to digital financial services for unbanked populations.
The report noted that the development and implementation of CBDC infrastructure requires careful consideration of privacy, security, and regulatory implications to ensure their success and widespread adoption.
The report concluded that while the development vision for each digital currency varies, all aim to enhance financial inclusion, security, and payment efficiency. As digital currencies continue to evolve, developers and policymakers need to focus on balancing sustainability, security, and efficiency.
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Author 
Mike Dalton
Before transitioning to crypto writing in 2018, Mike studied library and information sciences. Currently, he resides on Canada's West Coast.
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Bitcoin, a decentralized currency that defies the sway of central banks or administrators, transacts electronically, circumventing intermediaries via a peer-to-peer network.
Ethereum
$3,369.06
Ethereum is a decentralized, open-source blockchain platform that enables the creation of smart contracts and decentralized applications (DApps).