JPMorgan Worried About Bitcoin Adoption in El Salvador

JPMorgan Worried About Bitcoin Adoption in El Salvador Bank JPMorgan believes that adopting Bitcoin (BTC) as a legal tender in El Salvador carries a lot of risks. The parent company is concerned that the blockchain will not be able to handle the daily transactions made in the country. JPMorgan also points to the volatility and liquidity crunch of cryptocurrencies.

JPMorgan predicts that the adoption of Bitcoin (BTC) as a legal tender in El Salvador will come with a series of challenges for the country and the cryptocurrency queen, Bloomberg reported on July 11, 2021.


In a report signed by a group of experts, including economist Steven Palacio, the American investment bank is concerned that using Bitcoin as a means of payment could end up overloading the blockchain.

“Daily payment activity in El Salvador is believed to represent about 4% of the recent blockchain transaction volume and more than 1% of the total value of tokens that have been transferred between wallets in the last year,” said JPMorgan.

JPMorgan analysts believe that Bitcoin is experiencing significant liquidity problems. Concretely, most of the digital currencies that are already mined are inaccessible in the market.

The report states that 90% of bitcoins in circulation today are held in illiquid entities. Most of the bitcoins held in this entity are not transferred from one wallet to another within a year. The accumulation of cryptocurrencies has led to a reduction in the supply of digital currency.

For many investors, the oldest cryptocurrencies have become more of a store of value, such as gold, than an actual means of payment.

The bank argues that the lack of liquidity and the low volume that can be transferred to the network are “significant limitations of its potential as a medium of exchange”.

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JPMorgan suggests that the Bitcoin blockchain is not yet ready to support the transactions that will arise from its use as a means of payment in El Salvador. The financial holding company suggested that legal adoption of the currency could overload the Bitcoin network.

The report states that 90% of bitcoins in circulation today are held in illiquid entities. Most of the bitcoins held in this entity are not transferred from one wallet to another within a year. The accumulation of cryptocurrencies has led to a reduction in the supply of digital currency.

For many investors, the oldest cryptocurrencies have become more of a store of value, such as gold, than an actual means of payment.

The bank argues that the lack of liquidity and the low volume that can be transferred to the network are “significant limitations of its potential as a medium of exchange”.

JPMorgan suggests that the Bitcoin blockchain is not yet ready to support the transactions that will arise from its use as a means of payment in El Salvador. The financial holding company suggested that the legal adoption of the currency could overload the Bitcoin network.

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