JPM Coin — The Good, The Bad and The Ugly.
By Yaniv Feldman on ALTCOIN MAGAZINE
In case you missed it, JP Morgan announced last Thursday that it was rolling out the first US bank-backed cryptocurrency to transform payments business. A lot has been written on the topic during the weekend, so instead of writing a lengthy essay on what a centralized bank-controlled cryptocurrency actually is, if you can even call it that (ideally, it is the farthest you can get from what cryptocurrencies stand for, but technically it is still a digital asset on a cryptographic ledger), I thought I’d just give you everything you need to know in a short, concise, FAQ form.
What is JPM Coin?
It is a Stable-coin, backed on 1:1 ratio by USD held by JPMorgan, issued on JPMorgan private blockchain network, Quorum, and aimed at replacing traditional wire transfers and asset transfer systems such as the archaic, bank controlled SWIFT.
How will it work?
Whenever a bank client wants to transfer money or assets to another bank customer, they “buy” from the bank the equivalent amount of JPM Coin, and send it to the recipient through the Quorum Blockchain, instead of wiring the money/assets through traditional systems. On the other end, the recipient can “sell” the received JPM Coins back for the original asset or money that was “sold” by the sender. This can supposedly be done automatically and within seconds to minutes, in contrast to the days-weeks, it takes to do a similar transaction using existing systems.
Can I buy JPM Coins?
No. JPM Coins will only be available (at least for now) to large, institutional JPMorgan clients, that have passed the bank’s KYC process and are already transferring large sums of money on a frequent basis.
What if my intended recipient isn’t a JPMorgan Client?
Sucks for you. For now at least. Even though JPMorgan claims that bank 80 percent of the Fortune 500 companies (and serve most other major banks), at this point you will not be able to use the system for such needs. JPMorgan HOPES that given their market dominance, additional banks will want to join the JPM Coin bandwagon in the future.
Aren’t Ripple and Stellar doing exactly the same?
Not exactly the same, but yes. Most of Ripple’s products are aimed towards international money transfers and remittance, and Stellar has been very vocal on issuing digital representation of other financial assets on the blockchain for the same purpose of easy and fast clearing and settlement. Steller also has several “Stable-coins” issued on top of its blockchain for the exact same purpose. The main difference (even though that are many others, most technological) is the fact that JPM Coin is owned by one bank, JP Morgan, while Ripple is a for-profit company, and Stellar is a foundation, both aimed to serve multiple financial institutions as an intermediate, neutral third-party.
Does that change the bank’s position on Cryptocurrencies in general or Bitcoin specifically?
Although being extremely vocal against Bitcoin and cryptocurrencies, Jamie Damon, the bank’s CEO, has said multiple times he does believe in the potential for Blockchain and “Regulated” cryptocurrencies. Since the current project is on the other side of the spectrum with regards to Bitcoin and other cryptocurrencies, we can safely assume that the Bank’s and Jamie’s positions on the topics haven’t changed and shouldn’t expect them to open up the gates anytime soon.
Think I missed anything? Additional questions you want me to answer? Disagree with my analysis? Call me out at @yanivf on twitter.
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