The announcement made by JPMorgan Chase, the leading investment bank in the United States, regarding the launch of its blockchain and cryptocurrency has sparked heated discussion in the global crypto community. Some even say that JPM Coin, the name of the bank’s digital currency, could become a harbinger of death for Ripple and similar projects.
The opinions of blockchain experts and enthusiasts have polarized: some admonish that the entrance of such an influential player from the traditional financial world, which possesses virtually unlimited monetary resources, would disrupt the balance in the crypto world. Others argue that JPM Coin could be perceived as proof that the financial whales had finally recognized blockchain as a viable technology.
Interestingly, JPMorgan’s claim that they were the first American investment bank to develop and test a blockchain platform is not particularly accurate. There was another U.S. bank that had beaten them to the spot. On January 1, 2019, the Signature Bank, a mid-sized banking institution located in New York, announced that they would be carrying out all transaction of their business clients on the bank’s own blockchain platform called the Signet. The New York bank has already received approval from the New York State Department of Financial Services to execute peer-to-peer transactions between its commercial customers.
Both JPMorgan’s and Signature platforms have been developed on the basis of the Ethereum blockchain. The Quorum network, owned by JPM Chase, is a private permissioned blockchain which is primarily focused on data privacy. Signet is a proprietary blockchain developed jointly with trueDigital. The only significant difference between these two platforms, as Scott Shay, a chairman of Signature, has put it:
“We are actually out there doing this.”
That should come as a thorn in the side of the bank with unlimited financial capabilities since JPMorgan’s Umar Farooq assures that their blockchain is still a prototype in its testing phase.
According to the official explanation, published on bank’s website on February 14, JPM Coin is a digital currency that is pegged to the U.S. dollar’s official rate. This means that JPM Coin qualifies as a stable coin. The bank characterizes its digital token not as a monetary unit but rather as a mean for carrying out instantaneous domestic and international payments via blockchain. However, the universal implementation of JPM Coin is still theoretical. So far, the bank has conducted only one trial transaction to one of its institutional customers. The bank also emphasized that in the foreseeable future they intend to limit the scope of operations involving the blockchain only to be used for transactions between banks, brokers, and corporate customers.
Ironically, Jamie Dimon, the chairman and CEO of JPMorgan Chase, had been openly lambasting Bitcoin, calling it “worse than the tulip bulbs” (referring to the Tulip and Bulbs Craze of 1630s - author’s note) and threatening to “fire in a second any trader who was trading Bitcoin.”
Apparently, the attitude towards blockchain has changed dramatically at JPMorgan because now they claim that they have always rendered support to cryptocurrencies as long as they were “properly controlled and regulated.”
It remains to be seen whether JPM Coin could pose a severe threat to its potential rival, namely Ripple, which pioneered the development of blockchain-based remittance network.
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