JP Morgan: Blockchain, as a technology, should be separated from cryptocurrencies

Since its advent, cryptocurrencies have always been propagated with the blockchain, the underlying Decentralized Ledger Technology [DLT] that powers it. However, analysts at JP Morgan opine that blockchain can have far-reaching advancements, beyond the virtual currency world, as reported by Bloomberg.

Cryptocurrencies have ensconced the attention of the financial, technological and even political world, but what is at the core is the data recording and certifying function of the blockchain, said Joyce Chang, the chair of global research at JP Morgan, in an interview on January 28.

She said:

“Blockchain isn’t going to reinvent the global payment system, but it will provide marginal improvements. The most meaningful impact will probably be three to five years away and mostly on trade finance.”

The JP Morgan executive also highlighted the use of the coveted technology by Spanish banks, namely Banco Santander and BBVA. Banco Santander was hailed as a “pioneer in implementing blockchain technology,” in a January 24 report by the JP Morgan analysts, led by Chang.

As per the report, BBVA is the “first bank in the world to leverage blockchain technology throughout the entire process of issuing a EUR75 million ($86 million) corporate loan”.

Chang added that blockchain technology is still riddled by many problems, and she specified the following; “scalability, integration, cost-efficiency, and regulation,” as significant challenges for the industry.

Virtual currencies, which remain the most popular application of the blockchain, has been riding a bearish wave, with Chang stating that their trade volumes have declined and retailers have not adopted it.

She identified the regulatory hassle as being the main obstacle to the adoption of cryptocurrencies, stating:

“It’s been difficult to get through the regulatory issues.”

Chang concluded that blockchain should be made independent from digital currencies to see an increase in its progress. In her own words:

“We need to separate out blockchain from crypto.”

Recently, analysts from JP Morgan affirmed that the top cryptocurrency, Bitcoin, is not worth the cost estimated to mine the coin, except to the low-cost miners in China. The analysts calculated that the production-weighted cost to mine one BTC was $4,060 globally, with the crypto trading at under $3,500 at press time.

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