After the deadly plunge of almost 79% from end-2017 to end-2018, Bitcoin’s recent furious surge continued till Wednesday when it hit US$13,826.
After this one-year high, the cryptocurrency dived more than 7% the next day.
Whether or not the Bitcoin rally will continue, cryptocurrencies have seen more interest among enterprises.
JPMorgan’s JPM Coin, which is redeemable for US dollars and launched in February, is seeing interest from clients in the US, Europe and Japan on the potential for its prototype digital coin to speed up trading of securities such as bonds, according to a report by Bloomberg.
The reports says that the JPM coin could allow traders to "instantly" deliver securities in exchange for cash when it comes to bond transactions.
It works like this: the buyer purchases JPM Coins in advance and puts them in a JPMorgan deposit account while the seller’s bonds are represented by tokens, the report explains, adding that it takes two days now for a seller to electronically deliver, for instance, Japanese government bonds to the buyer in exchange for cash.
No interest in bonds? What about anytime cross-border payments?
Though not everybody or every business would use JPM Coins for this purpose, large corporate clients could use the coins for international payments.
While payments could theoretically settle in real time and any time of the day, it could also replace expensive bank transfers on network such as SWIFT.
According to JPMorgan, the JPM Coin is intended for the bank’s wholesale payments business that moves US$6 trillion around the world daily.
Unlike cryptocurrencies such as Bitcoin, retail investors will probably never own a JPM Coin as it’s supposed to be used by the bank’s large institutional clients that have passed regulatory checks.
As each JPM Coin is redeemable for a single US dollar, its value is not supposed to fluctuate, which is similar in theory to the so-called stablecoins.
The bank will issue clients the coins after they make deposits of US dollars.
According to the report, JPMorgan will probably begin pilot testing JPM Coin around year-end after regulatory approval with a few clients to see how it helps to speed up money transfer.
Blockchain spending to grow 83.9% year-on-year in Asia Pacific
While enterprises might still be skeptical about cryptocurrencies, blockchain—the technology behind cryptocurrencies—has gained more traction in the corporate sector.
IDC expects blockchain solutions spending in Asia Pacific excluding Japan (APEJ) to reach nearly US$523.8 million in 2019, an increase of 83.9% from the US$284.8 million spent in 2018.
In addition, the advisory firm forecasts blockchain spending in the region to grow at a robust pace over the 2018-2022 forecast period with a five-year CAGR of 77.5% and total spending of USD 2.4 billion by 2022.
IDC said banking, securities and investment services, and insurance industries will invest US$294.8 million combined in blockchain solutions this year.
The manufacturing and resources sector, driven by the discrete and process manufacturing industries, and the distribution and services sector, led by the retail and professional services industries, are forecast to see blockchain spending of US$95 million and US$90.6 million respectively this year, IDC added.
The infrastructure sector will see the fastest growth in blockchain spending over the 2018-2022 forecast with a five-year CAGR of 99.6%, followed closely by the distribution and services sector with a CAGR of 83.0%, the firm noted.
JPMorgan's blockchain payments network
In addition to the JPM Coin, JPMorgan also announced its blockchain payments network—the Interbank Information Network (IIN) last October.
The bank claimed the IIN will significantly reduce the number of participants needed to respond to compliance and other data-related inquiries that causes payment delay.
The Royal Bank of Canada and Australia and the New Zealand Banking Group were the first two banks to join the JPMorgan network.
Banks are not the only entities interested in blockchain and crytocurrencies.
Big Blue’s Blockchain World Wire and interest in crypto
Earlier this year, technology vendor IBM launched its Blockchain World Wire, a real-time global payments network for regulated financial institutions, after kicking off its initial pilot in October 2017.
Big Blue claimed World Wire is the first blockchain network of its kind to integrate payment messaging, clearing and settlement on a single unified network, while allowing participants to dynamically choose from a variety of digital assets for settlement.
The blockchain-based network will offer a new way for cross-border payment exchange and international settlement, said IBM, adding the settlements can be done in five to 10 seconds.
The network is already able to transfer funds to more than 50 countries using 47 digital coins backed by fiat currencies, IBM said.
World Wire has enabled payment locations in 72 countries, with 47 currencies and 44 banking endpoints, the firm noted.
Last year, IBM also partnered with stable coin network Stronghold to experiment with their cryptocurrency – Stronghold USB – and its Stellar-based trading platform.
Other blockchain industry stablecoins include Tether and TrueUSD.
Pending regulatory approvals and other reviews, six international banks, including Banco Bradesco in Brazil, Bank Busan in South Korea, and Rizal Commercial Banking Corporation (RCBC) in The Philippines, have signed letters of intent to issue their own stablecoins on World Wire, adding Euro, Indonesian Rupiah, Philippine Peso, Korean Won and Brazilian Real stable coins to the network, said IBM.
While Bitcoin will be very likely to continue its dramatic ups and downs, crypto for enterprises and blockchain-enabled payment networks which also allows payment by crytocurriencies are gathering steam in a moderate pace despite regulatory issues.
In the foreseeable future, Crypto’s foray into the enterprise might be faster than what you might have expected.