Wall Street giant JPMorgan Chase & Co. opines Adoption of bitcoin (BTC) in El Salvador could harm the Bitcoin blockchain.
Questioning the robustness of the Bitcoin network
A team from JPMorgan Chase & Co. believes that the adoption of bitcoin by El Salvador could be counterproductive for the Bitcoin blockchain.
According to the team, bitcoin trading volumes are normally between $ 40 billion and $ 50 billion per day. However, the bulk of this volume is handled by the major cryptocurrency exchanges across the world which leverage their high performance centralized infrastructure to ensure fast BTC transactions.
Additionally, a considerable portion of BTC is locked away in illiquid entities, over 90% of which have not moved anywhere in the past year. Additionally, a “large and growing fraction (of BTC) is held by low-turnover wallets,” the report says.
That being said, the report adds that daily payment activity in El Salvador would represent almost 4% of the volume of recent on-chain transactions and more than 1% of the total value of tokens that have been transferred between wallets over the course of the period. past year. However, the illiquidity and nature of the volume is “potentially a significant limitation of its potential (of bitcoin) as a medium of exchange,” the report concludes.
It should be remembered that in June, the Salvadoran Congress approved President Nayib Bukele’s offer to make bitcoin legal tender in the country.
Since the monumental development, however, there has been a divergent opinion as to the long-term viability of making BTC a legal offer.
While the current regime spares no effort to foster bitcoin adoption among its citizens, citizens do not appear to be big fans of the monetary experience.
However, Bukele strongly believes that bitcoin will help bank unbanked Salvadorans and significantly reduce the costs of sending remittances. On the contrary, the IMF is one of the organizations that questioned Bukele’s ambitious decision.
Lightning Network to the rescue?
While there is skepticism about bitcoin’s ability to handle a high volume of transactions, the Lightning Network continues to evolve the world’s first cryptocurrency.
Earlier this year, BTCManager reported on how US-based payments API platform Strike struck a deal with crypto exchange Bittrex to bring Lightning Network payments to more than 200 countries.
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