JPMorgan Chase is the largest bank in the United States and the sixth largest in the world. And surprisingly, he is talking about the potential of blockchain technology in a report. It talks about the opportunities and challenges of cryptocurrencies, and blockchain technology. Here we tell you a little more about it.
What is the report about?
This report covers a lot of ground: Bitcoin, cashless payments, efforts to expand blockchain, stablecoins and Facebook Pound.
All this shows us that JPMorgan is probably the most prominent financial services company that tries to adopt or learn more about blockchain technology. For example, in the last four years, they have cloned the Ethereum protocol as a business offer called Quorum and initiated some of the most important initiatives such as JPM Coin.
“The greatest value of blockchain is in payments and trade financing”
JPMorgan sees the greatest value of blockchain and DLT technology in the cases of payment use and trade financing. This comes to validate the efforts of the largest central banks that are experimenting with stablecoins for cross-border payments.
“This technology is necessary for the modernization of payments in economies without cash”
The stablecoins, mentioned 86 times in the report, are a fundamental instrument for a new payment ecosystem, which is exclusively mobile and could go further than cash. JPMorgan devotes a lot of time to digital payments.
What details can we know about your projects?
JPM Coin is a stablecoin anchored to the US dollar, and was announced in February 2019. This stablecoin would be created to facilitate payments between JPMorgan and its associated banks in the private and authorized Quorum network, but is still under discussion.
Like the Wells Fargo Digital Cash initiative, JPMorgan’s currency focuses solely on internal use as a payment vehicle. This allows moving assets without exposure to secondary markets and commerce.
In addition, such a project is an instrument aimed at institutional clients and the cross-border movement of money, to offer transactions at all times. Likewise, this would greatly optimize the internal liquidity inefficiencies that every bank of this size suffers today. And of course, it implies use of blockchain technology.
In short, blockchain technology has great potential to be an ally of the big banks in the world. Specifically for backend operations: compensation, settlement and guarantee management. This provides an immutable audit trail for reporting and for regulatory purposes. Also, it would provide a single source of truth for compensation and reconciliation of transactions.
Cryptocurrencies are interesting, but they still don’t give 100% security
The team that made the JPMorgan report explained that cryptocurrencies are interesting without a doubt. However, a 1% investment in them is an extremely risky and impractical effort.
The latent message in the cryptocurrency space is that they are uncorrelated assets and can be compared to gold as safe assets. Unfortunately, JPMorgan does not see it the same way, as they warn about high volatility and markets that are prone to single player manipulation.
In general, many professionals read JPMorgan reports. Especially, it is interesting for those who trust blockhain technology and cryptocurrencies.
It should be noted that this report excellently presents the events of this item that occurred last year. The above is also a validation of blockchain technology, as it shows that it is time to pay attention to this world, even if you are one of the largest traditional financial services companies.