The global investment management company BlackRock has made its stance clear on the ever growing positioning of cryptocurrencies, and that blockchain technology has some merit, though not all is as it seems. There are still many hurdles and obstacles that must be overcome before it can be fully integrated into society.
The company’s stance regarding these issues were part of the firm’s Global Weekly Commentary which was published on Monday by the Global Chief Investment Strategist Richard Turnill, who said.
“We see cryptocurrencies potentially becoming more widely used in the future as the market matures,” the commentary reads as follows. “Yet for now we believe they should only be considered by those who can stomach potentially complete losses. Similarly, blockchain needs to overcome significant hurdles to reach its promising future.”
Though most of the cryptocurrencies being owned by a lot of people show some promise in their sectors, they all still fall under a volatile umbrella, subject to huge price swings. Not to mention that they are unregulated and are way too risky to be integrated into mainstream investment portfolios right now. Turnill wrote, saying:
“The volatility of the cryptocurrencies make the gyrations in the U.S. equity market during the global financial crisis almost look placid.”
Despite this, the commentary mentioned that blockchain has potential for disruption in many key sectors such as logistics, pharmaceuticals to financial services. However, it would take a while before this technology could fully integrate itself with these sectors, and must involve the use of regulators and central bankers. Blockchain itself has the means to revolutionize how business is carried out, and could even remove old and redundant systems that are being used today. Systems that currently have billions of investment ploughed into it, to keep it up and running. This is the sort of thing that costs companies huge sums of money just to stay ahead of the curve. So looking at blockchain, it has the potential to save companies hefty sums of money in the long run.
“Take the financial industry,” Turnill explained, noting that “a blockchain-based single shared financial database could eliminate inefficiencies and risks associated with human processes, but adoption at scale would require a massive shift in software development and a well-constructed maintenance model”.
Baring in mind that this isn’t the first time BlackRock or Turnill have waded in on the crypto conversation.
Turnill has previously commented on the cryptocurrency markets as “scary” and a bubble, and made the argument that there is no way to assess the fair value for bitcoin, not to mention other altcoins.
BlackRock CEO Larry Fink has struck a different tone last fall, however, and endorsed the potential of cryptocurrencies, calling himself “a big believer” in their prospects and future applications.
The commentary offered by BlackRock is leading to suggest that it is unlikely to move on cryptocurrency soon, and it has already previously dismissed the idea of a bitcoin ETF (Exchange Traded Fund). However, despite all the negative press that cryptocurrencies have received over the past few months, and years, there is no clear sign of what the future will look like for cryptocurrencies and how they can integrate themselves into society.