There are now more than 1,000 crypto-currencies in existence.

The world’s largest wealth manager is sceptical about crypto-currencies and is “highly doubtful” they will ever become a mainstream means of exchange, but the technology underpinning them could add as much as $400 billion annually to the economy in 10 years. 

Crypto-currencies have soared in popularity since the first, bitcoin, was brought to life in 2009 and there are now more than 1,000 in existence today.

Despite this, UBS is “highly doubtful whether they will ever become mainstream currencies” because the need for companies and individuals to pay tax receipts in fiat money, and the potentially unlimited supply of crypto-currencies “pose significant barriers to widespread adoption,” Sundeep Gantori, equity analyst at UBS Wealth Management, said. 

His comments followed a flogging on bitcoin by UBS chairman and former Bundesbank president Axel Weber, who said the most well-known crypto-currency did not fulfil some of the most important functions of currency. 

JP Morgan chief executive, Jamie Dimon, has damned bitcoin as a “fraud” and has said he would fire any of his staff who traded it. 

But Wall Street neighbour Goldman Sachs was seemingly more bullish on bitcoin, and earlier this month confirmed to this publication that it was weighing a new unit dedicated to trading crypto-currencies. 

Crypto-currencies are largely unregulated, decentralised peer-to-peer payment systems that allow users to circumvent banks’ services by sending money in the form of digital tokens with minimal transaction fees. They have drawn scrutiny from regulators, governments and banks because of their ability to facilitate anonymous transactions, placing them at the centre of a heated global debate around money laundering and terrorism financing concerns. 

While banks have, for the most part, steered clear of bitcoin and other crypto-currencies, they have spent millions of dollars investing in the underlying technology, blockchain. 

“Blockchain is likely to have a significant impact in industries ranging from finance to manufacturing, healthcare, and utilities,” UBS’ Gantori said. “We estimate that blockchain could add as much as $300 [billion] - $400 billion of annual economic value globally by 2027.”

A blockchain is a virtual distributed ledger of transactions shared peer-to-peer that can record ownership across a public network of computers rendered tamper-proof by advanced cryptography. 

The technology is causing a stir within the financial services sector as its supporters believe it could reduce hidden expenses in the financial system by ousting inefficiencies across areas such as payments, syndicated loans and equity clearing.

Investing in blockchain is “akin to investing in the internet in the mid-nineties,” Gantori said, but admitted its “technological shortcomings still need to be resolved.”