JPMorgan worries that cryptos like Libra may face ‘Gridlock’

JPMorgan worries that cryptos like Libra may face ‘Gridlock’

As to JPMorgan Chase & Co. stablecoins which are built to bypass the massive changes of BTC and ETH, could break functioning normally in pressure periods.

Joshua Younger said leaning on his analysis that the cumulative cost of all existing stablecoins is not surpassing $5 billion, the low-volatility tokens are supposed to grow fast, and none more so than the Libra coin produced by Facebook Inc. Yet these tokens are unprotected from bottlenecks and breakdowns because of their necessity of the same short-period liquidity facilities standard in different payments systems. This indicates that there’s a danger that motion in the coins is going to progress quicker than the token can securely support.

The analysts noted that all stablecoins, especially Libra, have an opportunity of growing extensively and eventually shoulder a notable section of worldwide transactional activity. Still, they don’t consider the microstructure of running such a payment system. The danger that the system may gridlock could bring significant macroeconomic consequences.

There is also another threat that Libra can face and it is negative yields. Libra is confident about the profit from the collateral in the stock account, which will be fiat money like USD, EUR and government securities, to pay for managing the network and rewarding the members of Libra Association. But still, yields on the biggest part of cryptocurrencies aren't positive.