The Reason Behind The Reduction In Blockchain Usage

The Reason Behind The Reduction In Blockchain Usage

Quite many cryptocurrency enthusiasts were surprised when the news that Goldman Sachs, J Morgan, and Citi are set to enter into the crypto custody market. However, the three US-based institutions’ decision was seemingly expected due to the unimpressive blockchain initiatives, which signifies that many companies are deprioritizing blockchain tech in favor of native crypto assets. In the latest survey carried to see how institutions are reacting to blockchain technology, many users claimed that there is a slight reduction in blockchain’s effectiveness as it doesn’t offer the best to cryptocurrency investors as it used to in the past.

Crypto experts explain the unfavorable shift in blockchain usage

Prysm Group’s managing partner Guido Molinari explained the shift in investors’ and institutions’ interest in blockchain technology’s usage and adoption. According to him, 2015 and 2016 saw many investors who strictly focused on technology-based strategies. The set of investors was known for their role in the formation of consortia such as R3 and Corda protocol. However, the advancement in the crypto world and the high participation of well-established companies worldwide tend to force leaders of the industry into channeling their attention towards modern-day digital assets.

Nonetheless, despite the increasing change of mind among top cryptocurrency investors, the use of blockchain and distributed ledger technology (DLT) wasn’t significantly affected as many other investors stuck to the blockchain. Unfortunately, the trend keeps enlarging daily, leading to the emanation of blockchain-without-crypto startups in 2018. The startup was very effective in its early days as it helped exchange platforms generate tens of millions of dollars from major financial institutions. This eventually led to the loss of customers’ interest in blockchain long-term usage. Goldman Sachs was an example of a firm that decided to explore the latest trend when it launched its digital token.

JP Morgan became an extreme asset-focused firm

JP Morgan deployed a technology-first approach in the industry’s early days when blockchain technology was the readily available and go-to option. It’s no longer what it used to be since 2018, has become more of an asset-focused company by moving from Quorum to ConsenSys.

This has enabled the company to increase its level of investment in Bitcoin and other cryptocurrencies. As for Fidelity, the firm experienced a massive improvement in its asset-focused strategy in 2020. After launching its own extremely successful bitcoin custody business, Fidelity’s investments in crypto-related startups saw a significant improvement.

Meanwhile, more companies are tipped to follow the trend after Schwab disclosed plans to take center stage in crypto mining stocks. BlackRock is also expected to take the same route following its decision to get into the bitcoin game. Morgan Stanley, Bank of America, and Wells Fargo are also considering following in JP Morgan’s footsteps.

Bitcoin has successfully returned to its massive trading form in other crypto news after reaching a new high on Tuesday. The cryptocurrency presently costs $46,256, and it’s expected to maintain the newfound impressive price for more days. In this same scenario, Ethereum is back to its best after experiencing a short-term crash last week. The coins are presently sold at $1,741 per unit.