JPMorgan Chase & Co. is broadening its perspective on blockchain technology to show how digital money will change the financial world.

The emergence of linked databases like the blockchains that enable Bitcoin and Ether to exist as well as changing consumer preferences has turned the modernization of payments into a global theme, the New York-based bank said in a 74-page report Friday. Projects that have broken through to the real world include some equity trades that are now being settled on a blockchain system created by Paxos, while JPMorgan’s digital coin debuted last year to allow the bank to facilitate cross-border payments with a digital asset. China is developing its own digital yuan, the JPMorgan noted.

“2019 will be remembered for the rise of digital money,” the bank said in the report. “The groundwork is now in place for more mainstream adoption of blockchain technology at the same time that the foundation is being established for the development of digital currency and fast payments.”

Still, challenges remain. Technological issues such as scaling and slow networks must be overcome. And regulatory agencies around the world have been less than clear on how they view the creation of new digital assets. One of the most visible projects last year was Libra, a group of companies spearheaded by Facebook Inc. to create a digital token to compete with fiat currencies in the huge market of cross-boarder payments. Libra faced an intense backlash from members of Congress and European officials and JPMorgan struck a cautious note about it in the report.

“The failed release of Facebook’s Libra serves as a reminder that rapid adoption faces practical challenges to attain scale,” the bank said. Libra will need several market mechanisms in place to succeed, such as “short-term liquidity facilities, a source of positive-yielding collateral” and “less distributed, semi-private networks,” JPMorgan said.

Blockchain is promising for banks and corporations, if they can figure out how to use it. By combining many users or companies on one blockchain, or ledger, transactions can be done in near real-time with certainty, which proponents claim will produce billions of dollars in savings. Yet most corporate efforts are still in early development or testing.

JPMorgan also cautioned investors about holding Bitcoin and other cryptocurrencies in their investment portfolios. “Developments over the past year have not altered our reservations about the limited role that cryptocurrencies play in global portfolio diversification or as a hedge instrument,” the report said. “Crypto assets have a place in investors’ portfolios only as a hedge against a loss of confidence in both the domestic currency and the payments system.”

The bank picked winners and losers from the last several years of experimentation with blockchain systems. “Payments, trade finance, and custodial services remain the clearest use cases for blockchain,” it said. Using a distributed ledger to manage a supply chain, however, is a fading application. “The supply chain structure viewed as ripe for disruption is often a limiting factor in an industry still in the early days of leveraging data analysis, let alone applying new technologies.”

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