JPM Coin: A New Kind of Crypto
In September of 2017, JPMorgan Chase CEO Jamie Dimon bashed bitcoin, calling it “a fraud.” He claimed that he would fire any employee trading it for “being stupid.” Dimon’s stance on cryptocurrency was clear … until early this year.
It seems that, while bankers were publicly laughing at bitcoin, they were racing to build a rival to its technology. And JPMorgan was no exception. In February, it announced the first bank-backed cryptocurrency — a digital token called JPM Coin.
A New Crypto Coin
JPM Coin will allow the bank’s customers to instantly settle payments globally. It can also facilitate payments for new securities issuance and settlement.
JPM Coin issuance is back by customer deposits. Its value is pegged to the value of the U.S. dollar. Each coin represents a dollar in a customer’s account.
Like bitcoin, JPM Coin runs on an underlying blockchain (called Quorum) that records and validates transactions. This is a digital database that keeps track of who owns what within JPM Coin’s user network.
When a customer wants to make an instant payment to another JPMorgan Chase customer, they redeem the tokens with JPMorgan Chase, which then credits and debits the customers’ respective accounts. This will allow the bank to instantly settle customer transactions.
The Upcoming Crypto Battle
JPM Coin shows the improvements to the banking system from blockchain technology … but it will never rival bitcoin. Their similarities start and end with the fact that they both use an underlying blockchain to keep track of who owns what.
JPM Coin’s value is still controlled by the same monetary system that controls the U.S. dollar. It’s simply a faster way to use the existing global banking system.
Bitcoin was created as an antidote to a government- and bank-controlled monetary system. Once it’s able to facilitate instant payments, bitcoin will look more like a traditional currency.
It seems that traditional banks are trying to make existing money look more like crypto, and crypto is trying to be more like existing money.
In the end, the winner of this battle will be chosen by the people who choose to use the currency.
They have two choices: Stick with the same regime that drives the money supply into and out of financial crises … or try something different.
Editor, Crypto Profit Trader