Experts think El Salvador’s move to legalise Bitcoin could strain the blockchain

El Salvador’s declaration of Bitcoin as legal tender could create challenges for both the country and the cryptocurrency, according to a team from JPMorgan Chase & Co.

Bitcoin trading volumes commonly exceed $40 billion to $50 billion per day, but most of that is internalized by major exchanges, said a group from JPMorgan including Steve Palacio, Joshua Younger and Veronica Mejia Bustamante, in a report Thursday. A large portion of Bitcoin is locked up in illiquid entities, with more than 90% not changing hands in more than a year — with a “significant and rising fraction held by wallets with light turnover,” they added.