JP Morgan Chase Report
The well-known investment bank JP Morgan Chase comments in a new report on the possibilities of block chaining. The 74-page paper was published on February 21 under the title “Blockchain, Digital Currency and Crypto Currency: Moving into the Mainstream?” and provides an outlook on important topics from the crypto space. We take a look at the key messages.
Blockchain and Mainstream?
In the report, the authors and analysts deal with the question of whether block chain technology will succeed in making the leap into the mainstream in the coming years. In a first conclusion, the authors make the following comments on the topic: Although block-chain technology has not yet become mainstream, it has developed beyond experimentation and use in payment transactions, with the stock exchanges taking over the efficiency around settlement/clearing and security management. Block-chain solutions for trade finance and payments offer the greatest efficiency gains in the banking sector compared to other applications, but widespread adoption is still at least three to five years away.
3 to 5 years
The main statements are bullish, the foundation for an enormous development is already laid, but it could take another 3 to 5 years until relevant use cases find their way into the mainstream. Furthermore, JP Morgan Chase emphasizes the potential of distributed ledger technology and believes that it could interfere with banks’ business models.
The block chain offers several advantages in terms of information transfer and storage. However, analysts also see several dangers that could deny the technology its way into the mainstream. The further development of quantum computing raises new security issues. In addition, basic regulatory and legal questions would have to be finally clarified.
Volatility too high
In the report, JP Morgan Chase points out the high volatility of crypto currencies, compared to FIAT currencies. The question of whether such volatile assets can serve as a stable currency has occupied experts for years. Many experts see a solution in stable coins and the crypto space has been moving in this direction for some time. The report assesses the potential of these coins as follows: “Stable coins have the potential to grow significantly in global transaction activity despite the challenges posed by the microstructure of operating such a payment system. This week the crypto-market shows again how unstable prices can fluctuate back and forth. After an upward trend of over 700 USD on Wednesday, Bitcoin slid over 1000 USD on Thursday, in less than 60 minutes!
For a sustainable way into the mainstream, the blockchain projects still have to overcome many hurdles. The fundamentals are already quite bullish. Stable coin projects such as Libra could accelerate development, but regulatory questions must first be answered.