JPMorgan Misses the Point, Says Crypto Isn’t Currency

Crypto isn’t currency — at least, according to American multinational banking and financial services holding company JPMorgan Chase & Co.

Missing the Point

JPMorgan, a New York-based institution with a history that is far from pro-crypto, claimed in a wide-ranging note to clients that cryptocurrencies only make sense as a hedge in one’s investment portfolio — and are neither viable stores of value nor effective currencies. Wrote the company:

The huge volatility of the price of cryptocurrencies — with respect to either traditional currencies or to a basket of goods and services — has made use of cryptocurrencies as a unit of account impractical. Only hobbyists are using cryptocurrencies as a medium of exchange, at least for conventional transactions for goods and services.

Indeed, cryptocurrencies like Bitcoin and Litecoin have struggled to gain mainstream adoption. However, the note fails to mention potential innovations — such as Bitcoin’s Lightning Network or the upcoming Visa-based Litecoin transaction service LitePay — which could make cryptocurrencies act more like traditional currencies and, thus, help foster widespread adoption.

JPMorgan further claims that, even if the value of cryptocurrencies wasn’t volatile, they’d have a hard time challenging traditional currencies, writing:

At any rate, even a hypothetically stable-value cryptocurrency is unlikely to compete with the dollar for transactions in goods and services, in say, Chicago, or to compete with the euro in Stuttgart.

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