Blockchain 2: Crypto Boogaloo
I hate to admit it, but the blockchain bros might be right.
That’s an oversimplification. Let me start over. The last time I wrote about blockchain, it was during the Bitcoin Bonanza of 2017 (a term I coined, and which I do expect royalties from). The prices of bitcoin reached their peak at close to $20,000. New coins were being created every time you blinked. Blockchain fever was at an all-time high.
Fast forward a couple of months, and the excitement died down a little. Prices dropped dramatically, and by the beginning of 2019, they were down 81% from their high at the end of 2017. The Bonanza, it was widely concluded, had been a bubble. Crypto could never really take off, and all those who gambled on its success were deluding themselves.
Or were they? On February 14th, J.P. Morgan announced the creation of JPM Coin, the first ever bank-backed “digital coin.” According to Umar Farooq, the Head of Blockchain Initiatives at the bank, the digital coin is “designed to make instantaneous payments using blockchain technology.” In other words, one of the nation’s oldest financial institutions has put their very real dollars behind digital currency.
This is a historic announcement. Traditional financial institutions, which deal in “fiat” currency (AKA real money), have long been scornful of the possible merits of the blockchain. The CEO of J.P. Morgan himself, Jamie Dimon, called bitcoin a “fraud” back in 2017. It seems fitting, then, that his company is the first of the major banks to get behind blockchain in a tangible way.
JPM coin will not be available to just anybody yet; it will not be available at your nearest ATM. The bank has announced the coin as a “prototype,” only available right now to certain large institutions and corporations for business to business transactions. If the coin is successful in a business environment, perhaps other banks will introduce their own versions.
It’s far too early to say whether JPM coin will have any actual impact on the world of banking and currency. It could very well be a failed experiment that is quietly forgotten about before the end of the year. But it could also be the beginning of a drastic shift in the way individuals and corporations pay each other. For that reason, I think it’s worth paying attention.
By: Joseph Green