In a surprise move, traditional banking giant, JPMorgan Chase & Co. (NYSE: JPM) announced that they would be releasing a cryptocurrency. Dubbed “JPM Coin,” this new currency will be used internally by JP Morgan to rapidly transfer funds. As such, in its current state, JPM Coin will not be available to the general public – making this a form of private blockchain. The CEO of JP Morgan, Jamie Dimon, recently changed his position on cryptocurrency. In the past, he had criticized Bitcoin as a fraud and derided blockchain technology. Now, he’s fully supportive of the backend technology – even if he remains suspicious of Bitcoin’s future.
JP Morgan Chase is an investment bank and financial services company based out of the United States. It frequently tops the list of largest bank by market capitalization and value. This makes their entrance into the blockchain space a major shift in traditional views. As blockchain technology becomes normalized, cryptocurrency itself may be buoyed by the increased public confidence.
What is JPM Coin?
The new cryptocurrency, JPM Coin, will be issued and handled solely by JP Morgan. In this sense, it’s incredibly centralized – although the currency will be issued directly to institutional investors and hedge funds within JP Morgan’s umbrella. These groups will use JPM Coin as a way to transfer money globally – in a much more rapid fashion than legacy banking systems. One of the first arguments for blockchain technology lay in the speed of transactions versus traditional systems. However, this is the first example of a major bank adopting the technology for their use.
The technology involved with JPM Coin is not complex. Rather, it is a simple stablecoin pegged to the US Dollar. The coin is ostensibly based on the Ethereum codebase and produced by in-house company Quorum specifically for enterprise users.
Ripple Versus Legacy Banks
While JP Morgan Chase is the first traditional bank to enter the space, there is still competition. Well established financial blockchain service Ripple (XRP) fills a very similar role. Their native token, XRP, creates liquidity for a variety of remittance and global transfer products. Many in the cryptocurrency industry see JPM Coin as a serious threat to Ripple – but this overlooks XRP’s many advantages.
While JP Morgan is one of the largest banks in the world, other banks will still balk at using a competitor’s technology. We’ve already seen this occur with back-end legacy software, which is usually disparate and rarely interacts well with other systems. Ripple’s blockchain is specifically designed around this fallibility – and their status as a third-party grants them more maneuverability between companies. Ripple’s CEO is not concerned. Brad Garlinghouse made the comment on JPM Coin – “It misses the point.”
Article By: Adam Stone