JP Morgan’s New Cryptocurrency Is No Bitcoin, But It’s Still a Gamechanger

Cryptocurrency North America United States
JP Morgan CEO Jamie Dimon was a diehard bitcoin skeptic, but now America’s largest bank is throwinging its hat in the cryptocurrency ring.

Remember that time when JP Morgan CEO Jamie Dimon first said that bitcoin “Won’t end well. Someone will get killed,” then apologized then apologized and called the tech legit, only to call it out as “a fraud” later on and finally reveal that “he doesn’t really give a shit” about bitcoin in October 2018?

You might, as those harsh words certainly made for clickable headlines. What you might have missed hiding behind these blaring headlines, was that Dimon and his team did not actually deny blockchain’s or regulated cryptos’ potential; on the contrary, they invested resources into incorporating the tech into their business – and we’re talking America’s biggest bank with 80% of the companies in the Fortune 500 on its clients list – for example by launching Quorum, an Ethereum-based blockchain platform offering gold bars and diamonds-backed tokens to their corporate clients.  

Which brings us to today’s blaring headlines. And if they are anything to go by, JP Morgan just dived head-first into the cryptocurrency universe by releasing their own token, as announced today by NBC, NYT and others.

“JPMorgan Chase Moves to Be First Big U.S. Bank with Its Own Cryptocurrency,” declares the latter, “JP Morgan is rolling out the first US bank-backed cryptocurrency to transform payments business” announces the former, and having spotted those headlines, bitcoin HODLers around should rejoice at having their precious virtual coins legitimized by the biggest of players. Or should they?

As it’s often the case, reading beyond the headlines or going to the actual source of the news, JP Morgan’s own announcement gives a significantly different account of the story.

Yes, the bank is releasing its own blockchain-based cryptocurrency, but it’s nothing like the anonymous, uncontrollable, next-gen token that Bitcoin promised to be. There are, in fact, some major differences between JP Morgan’s “JPM Coin” and Bitcoin and co.  

Firstly, JPM Coin is directly linked to the US dollar – 1 JPM Coin = 1 USD. The bank’s clients will be able to purchase the new digital coins for their hard-earned cash.  

Secondly, JPM Coins are not and might never be available for retail investors – they were introduced for the bank’s vetted and checked corporate clients to be used in international payments, securities transactions and to replace the dollars JP Morgan’s treasury services users such as Honeywell International and Facebook, hold in subsidiaries to be used for bankrolling local salaries, paying suppliers etc.  

So, definitely no Bitcoin. Not even close.

Having said that, there is still cause for optimism. While JP Morgan’s move might not exactly mean a major bank throwing its weight behind what some might refer to as “real cryptocurrencies” (as opposed to US-dollar backed “stablecoins”), it does mark a major step for blockchain’s implementation into the global financial system.

How big? Who can say it better than J.P. Morgan’s blockchain projects Umar Farooq:

“We have always believed in the potential of blockchain technology and we are supportive of cryptocurrencies as long as they are properly controlled and regulated. As a globally regulated bank, we believe we have a unique opportunity to develop the capability in a responsible way with the oversight of our regulators. Ultimately, we believe that JPM Coin can yield significant benefits for blockchain applications by reducing clients’ counterparty and settlement risk, decreasing capital requirements and enabling instant value transfer.”

“The applications are frankly quite endless; anything where you have a distributed ledger which involves corporations or institutions can use this.”

It seems that from now the question isn’t “if blockchain will replace traditional payment systems?”, but how soon.

About the author

Maciek Klimowicz

Maciek Klimowicz

A seasoned writer and editor with 10 years of experience in a variety of print and online media. Recognizing the transformative potential of the blockchain technology, Maciek has now put his pen to work to explore the key issues of this fast-evolving sector. Contact him on [email protected].

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