The Ethereum upgrade has generated a lot of expectation in the cryptocurrency market. This is because the activities on your blockchain are expected to run more energy efficient, and thus could induce greater popularity. However, there are those who remain suspicious about it, and one of them has been the CEO of JPMorgan, Jamie Dimon. But, two JPMorgan senior analysts support the first argument in a recounting post about Ethereum’s future.
However, even if the CEO thinks that way, this does not imply that JPMorgan has not researched cryptocurrencies before. For example, since 2018 they have dabbled in this sector through their Blockchain Center of Excellence. Then in 2019, the bank launched its own stablecoin, JPMCoin. Finally, in March, JP Morgan even started offering its customers exposure to bitcoins.
Therefore, it is not surprising that there are analysts who are dedicated to find out and make forecasts about the future of this or that cryptocurrency. In this case, JPMorgan analysts assume that the Proof of Stake of Ethereum 2.0 will gain traction as a source of income for institutional and retail investors alike.
What does the JPMorgan analysts ‘ report say about the future of Ethereum?
Currently, Bitcoin and Ethereum blockchains use a demanding process called Proof of Work (PoW) to ensure that all transactions on the network are valid. However, scalability is not its best forte, and it also consumes a lot of energy.
In view of this, Ethereum is shifting from the proof-of-work model to the proof-of-stake (PoS) model, where investors lock their funds on the blockchain in exchange for rewards.
The authors predict in the report that the switch from Ethereum to PoS after the release of Ethereum 2.0 will stimulate the adoption of the alternative consensus mechanism. And it’s something they haven’t only considered at JPMorgan, as this is actually one of the underlying reasons for the update.
“The return obtained through participation can mitigate the opportunity cost of owning cryptocurrencies versus other investments in other asset classes such as US dollars, US Treasury bonds.” They even talked about money market funds in which investments generate a positive nominal return. “In fact, in today’s zero-rate environment, we see returns as an incentive to invest,” the report says.
Likewise, it is time to wait to see what happens. Why? Simple, because the expected release date of Ethereum 2.0 is in 2022. The current market capitalization of PoS tokens exceeds $ 150 billion, according to the report.
Things to consider
Although this is the view of JPMorgan analysts, it should be remembered that Ethereum is part of a volatile market. Whether with the use of PoW or PoS, volatility still exists. And so, more concerns may arise along the way.
However, as the cryptocurrency market matures and volatility subsides, staking will likely become a more reliable source of revenue. What do you expect from the Ethereum 2.0 update? Do you think JPMorgan analysts are right when they say that this shift could potentially increase cryptocurrency adoption?