JPMORGAN: A key component of bitcoin's design might be its Achilles' heel during a financial meltdownGet the Full StoryReuters Christinne Muschi
JPMorgan in a recent note outlined how bitcoin, since it is decentralized, would hit a speed bump if there were a shock to the economy.
Since bitcoin are released at a set rate, there's no way for the system to handle a liquidity crisis during such an event, the bank said.
A key component of bitcoin's design might be its Achilles' heel during a financial meltdown, according to JPMorgan.
In a big note on crypto and blockchain, the bank said bitcoin's decentralized network would not be able to address a liquidity shock. When such events have occurred in the US - most notably after the financial crisis - central bankers pumped extra cash into the economy to make up for a decline in lending and spending in the private sector. Since there's no central entity that controls the bitcoin network and the number of coins released each year is fixed at a certain rate, such a liquidity infusion would be close to impossible. Here's the bank:See the rest of the story at Business InsiderNOW WATCH: Ken Rogoff on the next financial crisis and the future of bitcoinSee Also:JPMORGAN: Bitcoin miners are in a 'hash rate arms race'JPMORGAN WARNS: There's a 'fairly high risk' bitcoin could get cut in halfBitcoin is jumping but the entire crypto market is still 'trading sideways'SEE ALSO: JPMorgan explains why a bitcoin ETF is a 'holy grail' that could change the game