Is the JPM Coin another attempt to kill off bitcoin?
The announcement of the launch of JP Morgan’s ‘native’ cryptocurrency, the JPM Coin, was one of the biggest news stories of the last week. It was a big surprise, because alongside economist Nouriel Roubini, Jamie Dimon, JP Morgan’s chairman and CEO, is one of the biggest crypto ‘haters’ around. Dimon has said many things about bitcoin including calling it a “fraud”. So, how come ‘his’ bank, one of the biggest in the world, is launching a cryptocurrency?
Dimon once said he would fire any employee he found trading in cryptocurrency, and yet here we are in a situation where the bank itself plans to use the JPM Coin to facilitate international transactions at greater speed and at a lower cost.
Needless to say, quite a few people are affronted by the move. It could be interpreted as a positive sign that the major financial institutions are finally coming around to the idea of cryptocurrency, but more than a few responses to the JPM Coin announcement suggest that there is a band of crypto defenders who see it as nothing more than game play by an institution that is upheld as one of the ‘bad guys’ of the 2008 financial crisis.
Others point out one very important fact: the JPM Coin isn’t a cryptocurrency in the purist sense; it’s a stablecoin or a centralised cryptocurrency. Several writers have wondered why JP Morgan simply didn’t use XRP for their transactions, as Ripple’s token does exactly what the JPM Coin does. Others say the JPM Coin could potentially kill off XRP. Also, as Dante Disparte observes in his article at Forbes, “few centralised cryptocurrencies have been successful,” and he suggests JP Morgan’s move into “into digitally minting its own cryptocurrency” may be a foolhardy enterprise.
He also points out that even if it is seen as a welcome move, then it must be accompanied by certain prerequisites. He writes: “This is a welcome move, provided of course large enterprises get the right combination of ceding control, augmenting transparency and reducing friction that blockchain-based business models entail.” However, as he adds, it will be difficult for a banking behemoth like JP Morgan to follow through on these, because its success is built on “opacity, complexity and asymmetries of information inherent in the market and its business model.” It is a case of smoke and mirrors at its institutional finest!
Furthermore, it is not the case that Jamie Dimon has had a change of heart about bitcoin: indeed, it is more likely that the intention behind JPM is to kill off bitcoin, Dimon’s bête noir, and possibly take down some other altcoins with it.
