Blockchain technology and cryptocurrencies have increasingly been gaining attention in the banking and financial domain with many major banks, from across the world. American bank JP Morgan Chase has come out as the first bank to develop its own cryptocurrency called JPM Coin.
This coin, however, can only be used by institutional clients of the bank that have gone regulatory checks. JPM Coin was developed by engineers at the bank, and is currently in prototype mode. The purpose of the coin is to make instantaneous payments between institutional accounts using blockchain technology.
The token will act as a stablecoin and will have a value equivalent to one U.S. dollar. JP Morgan’s blockchain lead, Umar Farooq, said highlighted three main use-cases for JPM Coin:
1. Replacing wire transfers for international payments by large corporate clients
2. Cutting settlement times from days to a few minutes
3. Instant settlement for securities issuance.
Another fundamental use for the coin will be to replace U.S. dollars held internationally by subsidiaries of major corporations using JP Morgan’s treasury services. Farooq also stated that the coin could be used for mobile payments, sometime in the future.
The JPM Coin will be issued on the bank’s proprietary Quorum blockchain and will subsequently be extended to other platforms. The intention is to make the token operable on all standard blockchain networks. The blockchain is a private, permissioned blockchain, thereby placing restrictions on who is allowed to participate in the network, and in certain transactions. Participants would need to obtain an invitation or permission to join the network.
JP Morgan has been notorious in its stance regarding cryptocurrencies with the chairman and CEO, Jamie Dimon, going on record and calling Bitcoin a fraud. He added, “It’s worse than tulip bulbs. It won’t end well. Someone is going to die.”
There are polarizing opinions among members of the crypto space. Ben Walsh, a writer for Barron said that JP Morgan’s new coin will ‘kill the Bitcoin dream.’ He further stated,
“JP Morgan’s coin rollout also says something about the broader state of technology in the current economy. Tech’s promise is no longer about replacing middlemen. It’s about middlemen using technology to entrench their profitable position.”
David Canellis, a writer for TheNextWeb, said that the JPM Coin is neither a cryptocurrency nor is it a stablecoin in spite of the fact that it uses a blockchain ledger.
The CEO of Ripple, Brad Garlinghouse, in a tweet said that JP Morgan was completely missing the point with its JPM Coin, adding that introducing a closed network today is ‘like launching AOL after Netscape’s IPO.’
Ripple has partnered with over 120 banks and financial institutions around the world with all of them utilizing Ripple’s technology.
Among the banks and financial institutions to utitliza Ripple’s technology are Lian Lian, Credit Agricole, Mercury FX, UnionPay, Swift, Mastercard, the National Retail Bank of Saudi Arabia, IndusInd Bank and PNC Bank among others.
In spite of being the first major bank to develop its own cryptocurrency, JP Morgan Chase isn’t the first bank to adopt blockchain technology into its framework. Bank of America has filed for more than 50 blockchain related patents to date, becoming the only bank with the most number of patents filed in regards to blockchain technology.
Close around 70+ banks around the world have adopted blockchain technology (Ripple and otherwise) into their processes, with the number increasing if you account for non-banking financial institutions around the world.