BlackRock's Turnill Sees ‘Promising’ Potential for BlockchainBy
BlackRock Inc. still sees cryptocurrencies as too volatile for all but the most adventurous of investors, though the investment company is warming to the long-term potential of the underlying blockchain technology.
The secure distributed-ledger technology that forms the basis of transactions with digital assets such as Bitcoin may offer “disruptive potential” for a wide range of industries from logistics to pharmaceuticals and financial services, according to BlackRock’s global Chief Investment Strategist Richard Turnill. However, it needs to overcome significant hurdles to reach its “promising future,” he said in a Feb. 26 commentary.
“Cautious on Bitcoin and bullish on the underlying blockchain technology -- this is an emerging consensus among policy makers and business leaders,” Turnill said.
While financial databases based on the system could eliminate inefficiencies and risks associated with human processes, “a massive shift in software development and a well-constructed maintenance model” would also be needed, Turnill said. Regulators and central bankers need to play a role, he said.
As for cryptocurrencies, while they may be more widely used in the future, they are still too volatile to likely have a place in mainstream investment portfolios any time soon, Turnill said. Bitcoin has been turbulent, reaching an intraday peak of almost $20,000 in December before wiping out about 70 percent of its value and then rebounding to a more stable level of about $10,000 this month.
“For now we believe they should only be considered by those who can stomach potentially complete losses,” he said.