JPMorgan Chase will issue its own crypto currency. The JPM Coin should make it possible to settle transactions of customers of the largest bank in the USA without delay. This is the first token in the ecosystem to be supported and issued by a US bank. A use case is likely to cause unrest at Ripple.
JPMorgan said its new coin, which will be issued on its in-house blockchain technology Quorum, was currently a prototype. The company plans to make the coin operable on all standard blockchain networks.
Bitcoin is known to compete to revolutionize the international monetary system. Crypto currencies counter a centralized system with a decentralized basic structure in order to redistribute the power of individual corporations. But the latter seem to recognize the potential of blockchain technology and digital tokens.
So it is none other than banking giant JPMorgan Chase who issues its own crypto currency. In the future, the JPM Coin will process payments for JPMorgan Chase customers without the usual waiting period and delay. The largest US bank moves six trillion US dollars a day and now wants to optimize this transfer with the JPM Coin.
JPM Coin competes with Ripple
However, as CNBC further reports, the JPM coin is not a crypto currency in the classical sense. In contrast to Bitcoin, Ripple & Co., which can be acquired via trading places or “mined” yourself, the crypto currency from JPMorgan Chase merely serves as a bridge. Accordingly, it will not be available to regular investors. Only companies, banks and brokers can use it.
“JPM’s project is much more evolutionary than revolutionary — it is utilizing a private, permissioned blockchain technology called Quorum, which is much closer to a Google Sheet than a Bitcoin,” said Travis Kling, the Los Angeles-based founder of crypto hedge fund Ikigai Asset Management. “The project is clearly competing directly with Ripple Labs and their centralized cryptocurrency XRP.”
“The JPM Coin is a stable coin whereas XRP is anything but stable,’’ said Tom Shaughnessy, principal at Delphi Digital. “That’s going to be a very contentious point for banks who don’t want the currency in which they make payments to be volatile.”
The JPM coin is a so called stable coin, meaning each of the tokens is pegged to the USD and is exchangeable at any time. Typical exchange price fluctuations, such as those experienced daily at Bitcoin, Ripple & Co., should thus be ruled out. This means that customers can only purchase them if they deposit the corresponding amount in US dollars with the bank. They can then use these to make payments or buy securities, JPMorgan Chase burns the tokens again after the use.
Finally, the new crypto currency has a total of three use cases:
- international payments for companies
- securities transactions
- Replacement of the US dollar for large companies in the treasury service business
Especially the first Use Case should be irritating for Ripple. In the end, it describes about the same Use Case that Ripples XRP is supposed to fulfill:
The first use case concerns international payment transactions for large corporate customers, which today typically take place via bank transfers between financial institutions in decades-old networks such as SWIFT. Instead of sometimes taking more than a day to process, because institutions have cut-off times for transactions and countries work on different systems, payments are made in real time and at any time of the day.
As we recently reported, Ripple is competing with the international payment giant SWIFT, among others. Now the company probably has an additional billion-dollar competitor.