Monday, April 22, 2019

JPMorgan Says Blockchain Needs to be Separated From Cryptocurrency

Joyce Chang, JPMorgan’s chair of global research on January 28 stated that blockchain needs to be separated from cryptocurrency. In her opinion, blockchain has more successful use cases, however, the performance of cryptocurrencies has been far from impressive, reports Bloomberg on January 29.

Blockchain Has Several Potentials

Per the media’s report, Joyce Chang in an interview pointed out that blockchain has several potentials. Specifically, the Distributed Ledger Technology (DLT) will be most impactful in the Trade and finance industry. Chang also said: “Blockchain isn’t going to reinvent the global payment system, but it will provide marginal improvements.”

In the same vein, the Chair believes that the DLT’s meaningful impact will be felt in three to four years from now. Even if it takes some years for the technology to have a meaningful effect, it will take care of areas where cryptocurrencies have faltered. She also added that virtual currencies may have gotten more attention, but what matters most is the technology behind them which enables the verification and recording of transactions.

Blockchain Areas of Application Outlined

Also in the area of the blockchain, JPMorgan’s representative outlined some areas where the DLT has found real-life applications. An instance of this is the Interbank Information Network (IIN) based on the Ethereum Blockchain. JPMorgan developed the network and it was powered by Quorum. So far, 157 banks have been linked to it in order to improve the sharing of information between these financial institutions.

Another case cited by Chang was also reported by BTCNN on December 14. Here Banco Bilbao Vizcaya Argentaria (BBVA), a Spanish Bank was able to issue a €150 million loan using blockchain technology. The recipient, in this case, was Porsche Holding, a major car distributor in Europe.

Blockchain Has Four Major Challenges

Despite these potentials and uses cases of blockchain technology, Chang has, however, pointed out that there are four major challenges of the DLT. Notable among them are integration, cost-efficiency, scalability, and regulation. In the case of cryptocurrencies, she also noted that regulatory issues were posing a problem. Moreover, the trading volumes of these virtual assets are on the decline and major retailers have not adopted them.

BTCNN on January 25 also reported of JP Morgan’s comment that the use of Bitcoin will remain challenged. The New York company had attributed this to the coin’s falling rate. They also stated that no major retailer had adopted the digital asset.

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