How embarrassing! As more details about JPMorgan ’s “The Bitcoinization of El Salvador” report come to light, the reality of the situation settles. Traditional organizations don’t have a clue that the Lightning Network exists and is up and running. More so, Bitcoin is legal soft in El Salvador due to the fact and only because El Zonte is a living and inhaling and exhaling example of the Lightning Network’s practicality.
With an omission that big, it could be argued that will everything on that document is invalid. However , we are going to take charge and react to the tidbits that Bloomberg published. Take into account that the full textual content is not yet available for general public consumption and that we on Bitcoinist already covered a preview of it:
Financial giant J. P. Morgan commented on the “Bitcoinization of El Salvador” in a recently published research. The banking institution compared the “Bitcoin Law” approved by this nations congress with the country’s dollarization process in the early 2000s. The bank said:
(…) this move does not seem motivated by stability concerns, but rather is growth-oriented however it is difficult to see any kind of tangible economic benefits related to adopting Bitcoin as a second form of legal tender.
Yeah, you’re failing to find out quite a lot, JPMorgan. And you are going public with your lack of knowledge.
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What Do We Know Regarding “The Bitcoinization of El Salvador”?
In a recent twitter update that sparked this article, Avanti’s Caitlin Long informed us that the JPMorgan report had been “ written by its LatAm analysis team. ”
WOW—pal sent us a @jpmorgan research report “The Bitcoinization of El Salvador” written by its LatAm analysis team, & it does not mention #LightningNetwork even once. 🤦♀️It’s clear they do not even understand the basics. Why does anyone pay attention to WallSt analysis on crypto??? 🤷♀️
— Caitlin Long 🔑 (@CaitlinLong_) July 10, 2021
And Bloomberg even gives us some of the brands of the people responsible:
“Bitcoin trading volumes typically exceed $40 billion in order to $50 billion per day, but most of that is internalized simply by major exchanges, said a group from JPMorgan including Steve Palacio, Joshua Younger plus Veronica Mejia Bustamante”
And then, they hit us with the shocking fact that Bitcoiners are HODLing:
A substantial portion of Bitcoin is secured up in illiquid organizations, with more than 90% not changing hands in more than a season — with a “significant and rising fraction held by wallets with light turnover”
Are they suggesting the fact that Bitcoin market lacks liquidity? Because it doesn’t. Tesla tested this currently with an amount no Salvadorean will ever reach. And JPMorgan ’s LatAm team knows this particular. However , they still say that the non-existent illiquidity is usually, “ potentially a significant limitation upon its potential as a moderate of exchange. ” Two “potential” in a row denote deficiencies in confidence, but that’ h neither here nor presently there.
Let’ s get to it, what are these JPMorgan people trying to say?
“Daily payment activity in Este Salvador would represent ~4% of recent on-chain transaction volume and more than 1% of the total value of tokens which have been transferred between purses in the past year”
Ok, that would be true if all of the transactions took place on-chain. They will won’t. Because El Salvador is using the Lightning Network.
Wall Street analysts et. al., get over yourselves. Look to the plebs and the leadership of El Salvador to comprehend the decision that nation made. I started here. (You’re welcome). https://t.co/ycl8EP04Y2 https://t.co/DLPn8NpP2Y
— Cynthia Lummis 🦬 (@CynthiaMLummis) July 10, 2021
JPMorgan Actually Thinks People Will Choose Bucks Over Bitcoin
The next stage of “The Bitcoinization associated with El Salvador” we’re going to challenge is the most ridiculous a single. According to Bloomberg, the record suggests that:
A persistent imbalance of demand regarding Bitcoin/U. S. dollar conversions on the government platform can “cannibalize onshore dollar liquidity” and eventually introduce fiscal and balance of payments risk
Even though JPMorgan is not really actually saying the words, the idea that the people of El Salvador will prefer the US Dollar to the soundest currency available is there. That might happen in the beginning, people will likely approach the problem carefully and choose the actual know, the US Dollar. Give them enough time and the whole populace will instinctively figure out which usually of the two currencies is the hardest. And they will join the particular HODLers.
BTC price chart for 07/12/2021 on Gemini | Source: BTC/USD on TradingView. com
JPMorgan ’s Expert Witness Furthermore Ignores The Lightning Network
To be fair, in the write-up it’s not clear if it is Bloomberg or JPMorgan ‘s report that brought this particular to the table. However , they quoted this gem:
“Bitcoin is the worst payment system ever invented. It is terrible, ” said Bill Quigley, the co-founder associated with stablecoin Tether and a leader of multiple aspects of the cryptocurrency space, in a current video interview. “Almost any kind of token is better than Bitcoin being a payment system. ”
That’s because “ almost any expression ” is centralized, Mr. Quigley. And that includes Tether and Ethereum. If you choose to do things in a decentralized way, there are trade-offs you have to make, but that’s beside the point. Using the Lightning Network into the image, Bitcoin is as fast plus reliable as all those tokens. And the system runs more than what’s arguably the only decentralized network there is.
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The question, nevertheless, is, why do not Mr. Quigley, Bloomberg, and JPMorgan acknowledge the existence of the particular Lightning Network? It’s not concealed. It’s right there, at the mere center of the El Salvador story.
Featured Image by Johannes Plenio on Unsplash -- Charts by TradingView