While the cryptocurrency craze may have died down a bit, J.P. Morgan Chase is here to revive that hype again with it’s on cryptocurrency. JPMorgan Chase, the largest U.S. bank (and the world’s sixth largest), has created its own cryptocurrency, called “JPM Coin”.
JPMorgan believes JPM Coin can help lower its clients’ costs and risks, by making money transfers instantaneous and by reducing the amount of capital they need to hold onto. About the coin, J.P. Morgan Chase said:
The JPM Coin is based on blockchain-based technology enabling the instantaneous transfer of payments between institutional accounts
In essence, this seems to be a digital mechanism designed to speed up the movement of money within JP Morgan’s systems, nothing more.
However, the slightly confusing part about this whole scenario is that a blockchain network is designed at its very core to be decentralized so no one party has control over the entire network, which is exactly the opposite of what is happening here at JP Morgan. So I wonder what’s the point of a blockchain network is in this situation.
What kind of cryptocurrency is it?
Each JPM Coin is redeemable for one US dollar, meaning its value should not fluctuate like the fluctuations you see with other cryptocurrencies. The JPM Coin has much more in common with stablecoin than your usual cryptocurrency in that it’s strictly pegged to the dollar. One JPM Coin will always be worth one dollar.
Once a client deposits money at the bank, they will receive the coins to use as payment or security purchase on the blockchain. After they are spent, the coins are destroyed by the bank. So, in essence, JP Morgan is offering to exchange their client’s dollars for cryptocurrency tokens representing exactly the same amount, which it reckons they will be able to move around more easily. This is quite a different concept to something like bitcoin, which has seen massive fluctuations in its value against the dollar.
Who will use it and when will they start using it?
The bank is set to start using its digital coin over the next few months internally but in the future, JP Morgan hopes to increase the use of blockchain technology for instant payment settlements between clients.
4 comments
“Each JMP Coin is redeemable for one US dollar, meaning its value should not fluctuate like the fluctuations you see with other cryptocurrencies. The JMP Coin has much more in common with stablecoin than your usual cryptocurrency in that it’s strictly pegged to the dollar. One JPM Coin will always be worth one dollar. ” — Can you please make your mind up? Is it a JMP coin or a JPM coin?
Hi. Sorry Its JPM. I have since updated the article. Thank you for the correction
waiting for your answer.. is it a JPM or JMP ??
Hi. Sorry Its JPM. I have since updated the article. Thank you for the correction