Daria is an economic student interested in the development of modern technologies. She is eager to know as much as possible about cryptos as she believes they can change our view on finance and the world in general.
As the payment flow of JPM Coin demonstrates several of Ethereum’s core benefits for the finance and banking industry, some are afraid of the impact JPM Coin may have on other coins, including Bitcoin, XRP, and the crypto market in general.
On Valintine’s Day, Wall Street giant JP Morgan launched its cryptocurrency dubbed JPM Coin. The developers were expecting a positive reaction and standing ovation from the public, however, the response of the community turned out to be quite ambiguous. Some have met the coin with enthusiasm, while others responded with disgust.
What is JPM Coin?
JPM Coin is a digital token which will be used by the banking behemoth to instantly settle transaction between the clients of its wholesale payments business. Based on blockchain-based technology, JPM Coin enables the instantaneous transfer of payments between institutional accounts. It is issued on Quorum Blockchain, an enterprise iteration of the Ethereum blockchain, and subsequently extended to other platforms. JPM Coin will be operable on all standard Blockchain networks.
The announcement by the company states:
“JPM Coin is a digital coin designed to make instantaneous payments using blockchain technology. Exchanging value, such as money, between different parties over a blockchain requires a digital currency, so we created the JPM Coin.”
The coin provides real-time gross settlement (RTGS). Rather than waiting two days for payments to clear, network participants can transfer tokenized fiat instantly, confidentially, and with full finality. The process of its work is as follows: firstly, a J.P. Morgan client commits deposits to a designated account and receives an equivalent number of JPM Coins. Secondly, these JPM Coins are used for transactions over a blockchain network with other J.P. Morgan clients (e.g., money movement, payments in securities transactions). Finally, holders of JPM Coins redeem them for USD at J.P. Morgan.
Umar Farooq, head of Digital Treasury Services and Blockchain, said:
“The JPM Coin isn’t money per se. It is a digital coin representing United States Dollars held in designated accounts at JPMorgan Chase N.A. In short, a JPM Coin always has a value equivalent to one U.S. dollar.”
Launching the new currency, JP Morgan became the first U.S. bank to create and successfully test a digital coin representing a fiat currency, US dollar. However, in the future, JPM Coin is expected to be extended to other major currencies.
Currently, JPM Coin is tested with a small number of J.P. Morgan’s institutional clients, but later this year, the pilot program will be expanded. Designed at the moment for business-to-business money movement flows, JPM Coin may become available to individuals later. As the company said, the cost-savings and efficiency benefits would extend to the end customers of their institutional clients.
JPM Coin’s Impact On Major Cryptos
As the payment flow of JPM Coin demonstrates several of Ethereum’s core benefits for the finance and banking industry, some are afraid of the impact the newly-created currency may have on other coins, including Bitcoin, XRP, and others, and the crypto market in general.
JP Morgan is creating their own "cryptocurrency" called JPM Coin.
They will be the first US bank to use a digital token to settle transactions between clients.
At first they ignore you,
then they laugh at you,
then they fight you, <—-
then they just buy bitcoin.
— Alec Ziupsnys (@AlecZiupsnys) February 14, 2019
A well-known crypto investor WhalePanda believes that the JP Morgan announcement is “long term a positive thing for Bitcoin,” but he joked about how Ripple investors would “scream in agony.”
On a serious note: I think the JP Morgan thing is long term a positive thing for Bitcoin. Let them play around with their stablecoin, once we get more mainstream the "cryptocurrency infrastructure" already sort of exists.
— WhalePanda (@WhalePanda) February 14, 2019
— WhalePanda (@WhalePanda) February 14, 2019
Some wonder why Ethereum, not XRP has been used by JP Morgan. Crypto trader Alex Kruger stated:
“This JPM Coin is the first big public step taken by one of the major banks against Ripple’s ambitions.”
Meanwhile, Ripple was quick to respond to the threat JPM Coin posed. Company’s CEO explained:
As predicted, banks are changing their tune on crypto. But this JPM project misses the point – introducing a closed network today is like launching AOL after Netscape’s IPO. 2 years later, and bank coins still aren’t the answer https://t.co/39EAiSJwAz https://t.co/e7t7iz7h21
— Brad Garlinghouse (@bgarlinghouse) February 14, 2019
Being further backed by one of the key XRP’s advocates:
You called it Brad. I love that article! I was new to space & it helped me understand the precise difference between transferring an asset and a liability or obligation. JPM Coin just means MUFG coin, CitiCoin, BarclaysCoin. XRP can be the universal fungible bridge asset for all! pic.twitter.com/J1DjXj3ZpG
— Dr. T ㊙️ (@XRPTrump) February 14, 2019
Indeed, new JPM Coin has some differences from a traditional cryptocurrency, which adds to its benefits and makes this initiative a very significant step for JP Morgan. However, only time will show whether this new industry’s player has chances to win the competition.