JPMorgan analysis shows that blockchain is the basis of digital money

A recent report by JPMorgan Chase suggests that current developments in blockchain are the basis of digital money, but it will take years for mass adoption to become a reality.

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1 JPMorgan’s analysis of stable currencies

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JPMorgan analysis points out that institutions have gone beyond the stage of experimentation with blockchain technology. Many scholarships and financial organizations have already started to use it because it offers the benefit of efficiency. The finance sector has become aware of the long-term potential of DLT technology to bring traditional business models to a higher level.

According to JPMorgan, mass adoption of the blockchain in the banking field will take between three and five years.

As for digital money, however, the situation is different. Central banks are not yet ready to revolutionize their traditional systems. At the same time, existing cryptocurrencies remain volatile, and JP Morgan’s report expresses reservations about their usefulness as an investment tool:

“The evolution of the last year has not changed our opinion about the limited role that cryptocurrencies play in diversifying the global portfolio or as a hedging instrument.”

JPMorgan’s analysis of stable currencies

However, the report notes that the cryptocurrency market shows signs of maturity, such as increasing institutional participation and introducing new contracts on regulated exchanges.

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As for the trend of stable currencies, they are viewed as a possible alternative to Bitcoin and altcoins. However, it raises technical problems, especially regarding liquidity assurance.

The bank believes that, like the Libra proposed by Facebook, stable cryptocurrencies require a greater degree of centralization:

“In order for a stable currency for Libra to succeed, it will likely require liquidity facilities, a source of positive-yielding reserve assets and less-distributed semi-private networks.”

JPMorgan is among the banks involved in blockchain and crypto asset development. Earlier this month, reports suggested that JPMorgan is considering merging its own blockchain Quorum team with that of ConsenSys, focused on Ethereum.