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Further, as US tech giants such as PayPal under its peer-to-peer Venmo business and Square enable bitcoin transactions, it was arguably moving closer to fulfilling one of the key roles of money in exchanging labour for future purchasing power in a single unit of account.

Bitcoins supporters argue its clearer role in the future of money means the price which topped $US50,400 on Monday is less relevant to its emerging use cases over the medium term.

Citi also made headlines by claiming bitcoin could uproot the US dollar as the primary means of payment between global importers and exporters: A focus on global reach and neutrality could see bitcoin become an international trade currency, Citi says.

This would take advantage of bitcoins decentralised and borderless design, its lack of foreign exchange exposure, its speed and cost advantage in moving money, the security of its payments, and its traceability.

If Citi is right about bitcoins ascent it may flatten banks lucrative foreign exchange fees and could do even more damage to pure-play discount rivals or middlemen such as Western Union, OFX Group, Transferwise and Travelex.

Blue-chip tech giant Facebook has already cottoned on to the possibility of creating its own blockchain-based digital currency named Diem as an exchange mechanism to eliminate overseas transfer fees and the spreads charged on currency exchanges to send money internationally.

In theory, a person in the US could transmit savings to Asia if the sender and receiver both had free Diem wallets via Facebook accounts. The recipients Diem could be exchanged into local currency with lower fees as the middleman in the process was cut out, alongside the ability to charge a mark-up on spot FX rates.

The idea is also applicable to tourists who could use a decentralised cryptocurrency or one backed by a basket of currencies (as in Facebooks Diem) to pay for goods or services abroad without paying a mark-up to middlemen often dealing in cash over-the-counter at airports, for example.

If central banks launch digital currencies of their own and allow citizens to hold accounts directly, this could accelerate a future where travel between Australia and New Zealand no longer required exchanging one fiat currency for another.

Central bank fiat-backed digital currencies and direct-to-consumer bank accounts could also disintermediate retail banks fee streams in other ways and would meet fierce resistance from the banking establishment.

Citi says bitcoin could especially appeal to the public and private sector in emerging nations where currencies were vulnerable to extreme devaluation if governments were considered uncreditworthy. It cited Africas largest economy, Nigeria, as an example where importers were forced to pay far more for US dollars in 2020 after its economy was rocked by low oil prices and COVID-19.

Other petrodollar economies across Africa, Latin America, and the Middle East can still only trade oil in US dollars as a result of deals done in exchange for US security and largesse after President Richard Nixon unpegged the dollar from gold in 1971.

Citi concluded there were obstacles ahead in the crypto space around regulation, custody, environmental concerns, insurance and cybersecurity, but the opportunities outweighed the risks to mean crypto was near a tipping point into joining the mainstream.

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Massive morph to the mainstream: Citi call fires bitcoin price - The Australian Financial Review