JPMorgan sees no “tangible economic benefits” of Bitcoin as legal tender – Bitcoin News

JPMorgan has commented on the bitcoinization of El Salvador, the country that recently made bitcoin legal tender alongside the US dollar. JPMorgan says, “It’s hard to see tangible economic benefits associated with the introduction of Bitcoin as the second legal tender.”

JPMorgan on the Bitcoinization of El Salvador

JPMorgan & Chase’s Latin American research team released a report on Thursday entitled “The Bitcoinization of El Salvador”. El Salvador recently passed a law making bitcoin legal tender alongside the US dollar.

The JPMorgan analysts who authored the report wrote:

It’s hard to see tangible economic benefits associated with the introduction of Bitcoin as a legal tender.

The report also points out that “recent surveys indicate widespread skepticism and reluctance to use Bitcoin as a medium of exchange … with extreme volatility, alongside official dollarization, being a particularly acute challenge in a bimonetary system.”

JPMorgan found that the daily trading volume of Bitcoin often exceeds $ 40 to 50 billion. However, a large chunk of BTC is locked up in illiquid companies, with more than 90% not changing hands in more than a year, the analysts explained, adding:

Only a small part of the circulating offer is mobile and available for everyday use; Daily payment activity in El Salvador would represent -4% of the most recent on-chain transaction volume and more than 1% of the total value of tokens transferred between wallets over the past year.

The JPMorgan report goes on to add that the illiquidity and nature of the volume “may represent a significant constraint on its potential as a medium of exchange.”

However, many bitcoiners were quick to point out that the JPMorgan report doesn’t mention the Lightning Network. Bitcoin advocate and CEO of Avanti Financial Group, Caitlin Long, commented, “’The Bitcoinization of El Salvador,’ written by his Latam research team, doesn’t even mention Lightning Network. It’s clear they don’t even understand the basics. ”Three major Bitcoin wallets in use in El Salvador are using the Lightning Network: the government’s upcoming Chivo wallet, the Bitcoin Beach wallet, and the Strike app from Jack Mallers.

The report continues, “A persistent imbalance in demand for BTC / USD conversions on the government platform (Chivo) could cannibalize onshore dollar liquidity and eventually introduce budgetary and balance-of-payments risk.”

In addition, the JPMorgan team believes that the introduction of Bitcoin as legal tender “could jeopardize negotiations with the IMF” for El Salvador, stating:

We believe the Bitcoin law complicates talks about IMF aid, which we believe is necessary to put El Salvador’s debt on a more sustainable path.

The International Monetary Fund (IMF) has warned of “a number of macroeconomic, financial and legal problems” related to El Salvador’s adoption of Bitcoin as legal tender.

What do you think of JPMorgan’s take on the Bitcoinization of El Salvador? Let us know in the comment section below.

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