A major United States bank JP Morgan Chase & Co. in a recent report suggested that the blockchain technology developments is laying the foundation for the digital money & changing the financial scenario of the world.
Although the use of Bitcoins has popularized the blockchain technology, Ether Is rewriting the global finance and changing payments industry.
Blockchain in banking still need few years
The report also notes that the cryptocurrency market is showing signs of maturity like increasing institutional participation and therefore the introduction of latest contracts on regulated exchanges. But these cryptocurrencies shows price volatility and claim that Bitcoin (BTC) has already cleared “intrinsic value but have yet to demonstrate their value for portfolio diversification.”
The groundwork has been laid for the mainstream adoption of blockchain technology and at the same time the inspiration is being established for the event of adoption of digital currency and fast payments.” Still, challenges remain. Technological issues like scaling and slow networks must be overcome. And regulatory agencies round the world are but clear on how they view the creation of latest digital assets. One of the foremost visible projects last year was Libra, a gaggle of companies spearheaded by Facebook to make a digital token to compete with fiat currencies within the huge market of cross-boarder payments. Libra faced an intense backlash from members of EU officials and JP Morgan struck a cautious note about it within the report.
As per the sayings of the bank, “Project Libra, could be a reminder for adopting in the earlier stages which had faced practical challenges to realize the scale ”. It will require some market mechanisms, like “short-term liquidity facilities, a source of positive-yielding collateral” and “less distributed, semi-private networks” to succeed. For Libra to succeed, it will likely need a source of positive-yielding reserve assets, short-term liquidity facilities, and less distributed, semi-private networks.
JP Morgan’s relationship with Crypto & Blockchain Tech
JP Morgan had cautioned about holding cryptocurrencies in their investment portfolios as it had seen in the past that these instruments hedge against a loss of confidence in both domestic currency and payment system.
Umar Farroq, banks’ head of digital treasury services and blockchain, has intended to test it’s JPM coin digital currency with selected clients. It had earlier in Feb 2020 considering about merging its blockchain platform with an Ethereum focused firm, ConsenSys.
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