A $57 Billion Lesson In Perspective For Crypto
On Monday, the American investment bank JPMorgan & Chase pulled off something pretty remarkable.
Ahead of German drugmaker Bayer’s acquisition of the agrochemical company Monsanto, JPMorgan was tasked with collecting the funds so that the deal, two years in the making, could finally be completed.
But this wasn’t a few hundred million, or even a couple of billion. Instead, the bank had little more than 12 hours to collect a total of $57 billion from lenders across the globe, wire it into the same bank account, ensure the paperwork was in order, and notify the relevant parties – all before pulling Monsanto shares off the New York Stock Exchange prior to open at 09:30 ET.
$57 billion is more than the market cap of Ethereum.
As well as a testament to its organizational abilities it also highlights the scale at which JPMorgan can operate.
At the time of writing, the amount JPMorgan managed to allocate for a single deal was over $8bn more than the total value of Ethereum. Even before the ‘Bloody Sunday’ price slide, which wiped 15% off the coin’s value, the second biggest crypto by market cap was a mere $3bn more than the all-cash Bayer bid.
Working in cryptocurrency it is all too often easy to lose a sense of scale. The total value of the crypto market, currently floating at just under $280bn, is indisputably a large figure. But when placed alongside other sectors, it is a veritable minnow.
The entire crypto industry is smaller than the $378bn current market cap of JPMorgan, which itself accounted for a mere 3% of the world’s banking market in Q1 2018.
Between them, just five American men – Bezos, Buffett, Gates, Zuckerberg, Ellison – have a higher net worth than the value of all cryptocurrencies combined.
With all the promises and hopes for a decentralized/distributed future, it seems that centralization isn’t just getting by, it’s positively thriving.
Grassroots popularity lies behind the Ethereum future.
Ethereum’s a popular blockchain. The vast majority of ICOs run off its platform and most developers accept, or more often than not, specifically ask for ETH during the fundraising process. The fact that the word ‘Ethereum’ has been searched for 110m times on Google over the past two years, highlights a sustained level of interest.
According to an article published by ConsenSys, an Ethereum-powered blockchain software company, the Ethereum developer community currently stands at 250,000 people worldwide. Truffle, an Ethereum developer framework, surpassed 200,000 downloads in October of last year; and the browsing extension, MetaMask, which allows users to run DApps without an entire Ethereum node, has reached over 1m users.
This is promising. As has been highlighted by Crypto Briefing in the past, there is a noticeable shortage in blockchain engineers and developers with big-name companies and institutions having had to resort to hackathons and large starting salaries to build a team that can get their projects off the ground.
The sheer number of people either using, developing or just been aware of Ethereum and the wider blockchain space is telling. On Tuesday, it was announced that JPMorgan’s Blockchain Strategy Lead, Michael Chang, had moved to the professional services firm Wachsman, to head up the company’s strategic advisory group.
JPMorgan’s CEO, Jamie Dimon, the man who can raise $57 billion in half-a-day, is a well-known cryptoskeptic – and other titans of business such as Berkshire Hathaway’s Warren Buffett, and the founder of Microsoft, Bill Gates, have criticised the nascent industry as “rat poison squared” and the direct cause of deaths from narcotics, respectively.
However, the number of people signing up is continuing to increase. According to Etherscan.io, the number of Ethereum wallet addresses last week surpassed 35m, overtaking the number of Bitcoin addresses for the first time.
Despite uncertainty and plunging prices (ETH has taken another 8% hit today) an increase in popularity suggests recognition in the project’s viability.
Although small at the moment, cryptocurrency, and more specifically Ethereum, has potential.
Not too long ago, a ’90s clip from the CBS 60 Minutes news bulletin re-emerged. A Wall Street broker explained to an incredulous reporter that Amazon, which had lost $125m the year before, had surpassed the value of the then market-king Sears because investors looked to the future and understood “the beauty of technology”.
Fast-forward to today and Sears is closing stores all across America, as Amazon begins production of a serialized version of Lord of the Rings and continues its expansion into the grocery industry.
Cryptocurrency is to JPMorgan as Amazon has been to Sears… and the bank knows it.
If auto-fulfilling smart contracts can be implemented then JPMorgan’s role as cash-raiser-in-chief would become obsolete: the money could be paid out at the right time automatically.
Bayer could have saved the headache of ensuring the money would be there on time and saved on an what can only be assumed to be a hefty bill for using JPMorgan’s services.
Centralized institutions rule the roost, and will continue to do so for the immediate future. But decentralized platforms like Ethereum are gaining traction and the high-level of interest in them suggests confidence in their viability and future.