Last year, many in the cryptocurrency industry predicted that the rise of institutional investors will lead to mainstream adoption of cryptocurrencies and the underlying blockchain technology and subsequently boost the price of cryptocurrencies. Unfortunately, things didn’t happen as expected, at least not for cryptocurrencies. The price of cryptocurrencies fell significantly against the USD. This decline led to a reduction in media coverage of emerging technology. While blockchain technology, as a whole, made some progress, the global research chair at JPMorgan Securities, Joyce Chang, said that blockchain is not anywhere near institutionalization.
According to Chang, there are a lot of hurdles that need to be crossed before the industry can achieve cross-industry adoption on a large scale. The executive said this during an interview on the Bloomberg Daybreak Americas show. In Chang’s opinion, the adoption of blockchain technology is being promoted by industries that can enjoy immediate gain from it. These industries have similar characteristics according to Chang.
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She said that these sectors that are spearheading the adoption of blockchain technology rely on cumbersome traditional paperwork systems. Using trade finance as an example, she said that she expects blockchain technology to be significantly impactful in the next three to five years. Another sector that will benefit from blockchain technology in the next few years, according to Chang, is the financial sector. Chang said that JPMorgan is working on an interbank data network that is based on blockchain technology. According to her, the network already has about 157 participant banks. In her words:
“We have moved passed the blockchain experimentation stage. While it is still in use case form, we are seeing an increase in the adoption of the technology. Spain and Australia are ahead.”
After acknowledging that blockchain technology has made progress in some sectors. She said that many challenges must be eliminated before the world can experience the kind of cross-industry transformational change everyone is expecting. She continued:
“How can the technology scale when its core principle is decentralization? That’s the catch about blockchain. I believe there are still a lot of regulatory, security and data privacy issues that need to be addressed if blockchain technology is to scale.”
Identifying these issues isn’t the problem. Resolving them, on the other hand, is rather complex. Chang said that the primary focus of implementing blockchain technology is circumscribed to its specific use cases. Chang’s argument is that using blockchain technology in the trade finance industry is efficient for digitizing and automating the process. This is why it has gained a lot of traction in this space in recent times.
As reported by smartereum.com in January, one of the most popular banks in the world, Standard Chartered completed a trade finance deal using blockchain technology. This was the first time the bank used the technology to complete such a transaction and it reported great success.
Standard Chartered is one of the banks that was involved in the development and launch of eTrade Connect last year. eTrade Connect is a blockchain trade finance platform.
In conclusion, Chang said that blockchain technology is going to help marginal improvements in the global payment sector but this will not be enough to reinvent the system completely.
Do you think blockchain will ever reach mass adoption? Share your comments.
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