Financial giant JP Morgan is no stranger to sounding off on cryptocurrency and blockchain. Global research chair Joyce Chang mentioned in a recent interview how blockchain would be most meaningful “mostly on trade finance” in about three to five years.
JP Morgan’s John Normand recently sounded off against the argument that Bitcoin is a better store of value than traditional hedges like gold. He asserted how the cryptocurrency only generated positive returns for three months “during the 10 worst monthly performances for the S&P 500.”
This week, JP Morgan’s Global Research division released an overview of crypto and blockchain’s potential across various global markets and sectors. The paper was designed to follow up on the February 2018 ‘Decrypting Cryptocurrencies’ series.
The 55+ page report offered an overview of various views from analysts, with some taking a more bullish or bearish perspective on the future.
Part of the report was dedicated towards keeping tabs on blockchain’s adoption across different sectors. Blockchain’s influence in ‘Big Tech’ continues to emerge, according to the report, thanks to companies like Amazon’s Web Service and Microsoft Azure, who are offering services to help foster blockchain and dApp development.
Adoption is also starting to make a presence across the transportation sector, especially to replace solutions that cannot allow companies to scale and digitize further. One poignant example highlighted in the report was IBM’s Trade Lens partnership with shipping giant Maersk and the Voltron trade finance platform (built on R3 Corda).
Some of the report’s most bullish takes came from the European Utilities analyst, who noted how blockchain has the potential to unlock efficiency gains up to “€750mn annually.”
Additionally, the report’s authors saw endeavors like the VanEck proposal and futures products as representative that the industry was pushing forward to tackle regulatory concerns. Speculation was these types of endeavors would be appealing to institutional investors even if they took a lot of time.
The report noted a few stumbling blocks for crypto and blockchain’s adoption that could quell investor and corporate interest across a variety of sectors.
One of the biggest points of contention had to do with the primarily retail driven market that has (so far) seen very few so-called legacy institutions participate in the crypto and blockchain world.
Other concerns noted in the report included issues with estimating Bitcoin’s intrinsic value and the lack of material retail acceptance of cryptocurrency.
However, the report’s authors said smaller or more flexible businesses could be more apt to accept cryptocurrency by leveraging different avenues of payment.
Despite some of the progress made on the regulatory front, the report asserted a big challenge for the implementation of blockchain and cryptocurrency technology was the lack of a standardized framework. This issue becomes a bigger point since, according to the report, some blockchain nodes are located across the globe in different jurisdictions.
Overall, the JP Morgan Global Research team said distributed ledger technology “by itself has great potential to simplify and speed up transactions and information transfer, but [is] not convinced that its real value lies in its first foray into the world of currencies.”
Speaking as to blockchain, team members noted they regarded it as “unlikely to re-invent the global payments system,” but that it could marginally improve payment efficiency.