Morgan Stanley releases 2020 regional blockchain forecast report

Author: Geneva

The latest report released by Morgan Stanley analyzed the impact of Bitcoin on major banks and believed that the advantages of Bitcoin will not be prominent in the short term, but may develop in the future.

The report, published recently, predicts several key time points for the future development of blockchain technology from now to 2025, and points out the top ten obstacles facing blockchain technology in banks.

However, the report shows that investment banks are trying to understand the impact of blockchain technology on their portfolios and bank revenues.

The report states:

We believe that despite the positive outlook, its impact so far has not been significant enough to impact 2017/18 EPS (earnings per share), as our share allocation provides a rough indication of our bank's medium-term earnings.

Key time points

In addition, the focus of this report is Morgan's analysis of the development of regional blockchain technology in the next decade.

For example, the report defines 2016-2018 as the bank’s proof-of-concept period, and further lists several key time points to provide a benchmark for the bank to judge the development of Bitcoin during this period.

The report states that banking institutions need to successfully promote this technology, provide asset trading, and evaluate whether this technology has more benefits compared to traditional legacy systems.

The report analyzes that the next period of financial institutions' acceptance of Bitcoin overlaps with the current period, from 2017 to 2020.

This period is called the "germination period of shared infrastructure". Now that the technology has been verified, this period will be better than the previous verification period. Interfaces for external users will be developed, and APIs will be provided to allow others to access the system.

Next we will enter the final period of 2021-2025, which is the asset appreciation period. As the advantages of this technology are recognized, people will invest more assets in the regional chain.

Obstacles to development

However, the report shows that there are still nearly ten sources of obstacles in this final period of regional chain development.

They include:
• Selection of incentives • Setting of standards • Deciding which shareholders are responsible for the increase • Ensuring that the solution is simple and feasible • Establishing a regulatory mechanism • Assessing legal risks, cost utilization and security • Responding to routine inquiries • Expanding the use of technology

Each item is graded according to four aspects. No matter in which aspect, the principle of simplification is the most important. These four areas include: economy, technology, cooperation, policy

The report states:

Any killer application software must provide users with simple services, and the same is true for regional blockchain technology. To ensure that the software is simple and easy to understand, it needs to be seamlessly connected with other parts of the technology chain, so as to ensure shorter establishment, training, and maintenance time. The service must be based on high efficiency, easy to understand, and easy to operate.

The report ends with a series of tentative conclusions and predictions, affirming the development of blockchain in the post-trade finance sector in the near future, especially in the areas of loans, credit default swaps and securities.

It is further predicted that the payment industry will be greatly affected by regional chains in the future.

Stock bearishness refers to a sharp drop in profits and the risk of profits flowing into other companies.

For regulators who make money by analyzing securities and tweaking blockchain technology, the “value-added threat” will affect their income in the short term.

JPM compiled from
Coindesk, Morgan Stanley Report Issues Predictions for Blockchain in 2025, by Michael Del Castillo.