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JPMorgan Blockchain report: Detailing the global enthusiasm for Blockchain in the financial sector

JPMorgan Chase investment banking analysts have now prepared a thorough review of the most critical events, processes, and trends that the Blockchain and cryptocurrency field experienced in 2019.

jpmorgan-blockchain-report-detailing-the-global-enthusiasm-for-blockchain-in-the-financial-sector

Source: JPMorgan

Has Blockchain entered the financial mainstream?

In a 74-page report, JPMorgan described several projects that have shown ‘real world’ applications to Blockchain in finance and, as a result, described 2019 as the year of the rise of digital currencies. Besides, the major US investment bank has shed light on many of the most promising use cases it sees as having potential for broad application in the financial sector.

For JPMorgan Chase’s analysis, 2019 was the year of applying too much-decentralized technology.

The report stated:

“2019 will be remembered for the rise of digital money.”

The report addressed both successful (PAX, USDC) and failed (Libra, Petro) attempts to disrupt classical payment and money transfer institutions with cryptocurrency. This proves the world is ready for private payments. This statement is evidenced by global growth in all types of non-cash payments (electronic payments, cards, mobile wallets) in Asia.

By the way, Blockchain-based systems have not yet overcome many challenges on their way to mass adoption. First of all, it is the price movement. It is the volatility of cryptocurrencies, mainly Bitcoin, that makes organizations focus on stablecoins. Besides, the large gap between Bitcoin’s market capitalization and its intrinsic value has not been overcome by price recovery is another obstacle on the way to investors’ portfolios.

Development steps towards Blockchain

In the report, JPMorgan describes how Blockchain is rapidly being brought up by financial and political entities. They proposed that the foundation of the present has replaced the application of Blockchain in the field of Payment, commercial finance, and custody services, which is still the most obvious use case for Blockchain.

JP Morgan says that the value of the technology is to facilitate cross-border payments using digital assets and allow some equity transactions.

Over the past few years, research and investment in Blockchain technology have been launched by several well-known brand names: Facebook (with their Libra coins), Winklevoss brothers (Gemini coins), and JPMorgan (with coins JPM money). Governments are also turning: For example, China is said to be developing a new digital Yuan, which will be run by the central bank there. And the Bank of England has announced the start of research to create a digital currency.

Challenges in the future

While the report discusses the evolution and proliferation of Blockchain technology – it’s not overly optimistic. After giving encouraging descriptions of the changes, the company downgraded the crypto project for a second interest investment.

Developers have not changed the reservations about the limited role of cryptocurrencies in diversifying global portfolios or as a hedge, according to JP JPMorgan. They claim that cryptocurrencies act as a ‘hedge’ to protect their investments from losing confidence in traditional currencies.

This is different from the attitude of many crypto asset management companies, such as Enigma Securities, with the belief that cryptocurrencies will soon play an essential role in hedge fund portfolios.

Bitcoin’s volatility that makes organizations focus on stablecoins

Stablecoins, both corporate and state-backed (CBDCs), are also within reach of the community and management. The market is desperate for their toolkit to provide them with many use cases.

jpmorgan-blockchain-report-detailing-the-global-enthusiasm-for-blockchain-in-the-financial-sector1

Source: IMF

Stablecoins may be able to gain full acceptance in the field of cross-border money transfers and bank payments. Many banking institutions around the world are seeking to issue their stablecoins or use companies.

JPMorgan analysts have named a more severe threat to cryptocurrency adoption. It is the implementation of quantum computations into distributed technologies. They can severely weaken DLT security and allow sudden hacking.

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