Since Bitcoin was founded, the cryptocurrency has been bashed to hell and back. Yet, the technology behind it has been extolled, especially by financial & political incumbents who wish to handle the reins of the blockchain bull.
A recent interview with JP Morgan’s chair of global research, Joyce Chang, only cemented this theme. Per Bloomberg, which conducted the candid conversation, Chang was hesitant to admit that decentralized (or centralized) ledgers would overhaul the global financial system. However, she made it abundantly clear that the technology is likely to “marginally” improve global ecosystems after a period of around three to five years. The Wall Street researcher added that blockchain technologies are most likely going to see an application in trade finance, noting that the innovation can allow for “high potential gains in efficiency from digitalization.”.
Chang pointed to the Interbank Information Network (IIN), which consists of 157 member banks internationally. IIN was developed by JPMorgan on its Quorum platform, which is based on the Ethereum blockchain. The organization aims to tackle challenges of sharing information between banks and to expedite transactions to recipients.
Outside of JP Morgan’s efforts, blockchain has also seen notable levels of adoption. Per previous reports from us, 2018 was a monumental year for Ripple, a fintech giant based out of San Francisco, and XRP, as the company and token saw monumental adoption from bankers. The aforementioned JP Morgan research head also mentioned Banco Santander’s use of blockchain technology, noting that the company issued an entire corporate loan valued at $86 million through proprietary ledger systems.
While blockchain is becoming more widely adopted for certain financial services, Chang noted that the technology faces four major challenges: scalability, integration, cost-efficiency and regulation.
This report comes just days after reports arose that JP Morgan’s Bitcoin-related report was harrowing, and painted a dismal future for this market.
Analysts from the firm even claimed that the value proposition of cryptocurrencies (not digital assets), namely Bitcoin, is limited, noting that such digital Mediums of Exchange (MoE) and Stores of Value (SoV) would only be truly viable if the gold, U.S. fiat, and other government-issued currencies collapsed. While there are many that beg to differ — claiming that BTC is viable as a digital semblance of gold — the analysts seemed adamant in maintaining their belief system. They wrote: Even in extreme scenarios such as a recession or financial crises, there are more liquid and less-complicated instruments for transacting, investing and hedging.
It was added that interest from pension funds and asset managers have also steered clear of cryptocurrencies, as fears remain regarding crypto’s underlying volatility, security flaws, and ability to be used in seeming illicit acts. Aggregating its concerns, the firm determined that BTC could fall to (and below) $1,260 if the “bear market persists.”