JP Morgan are launching a new cryptocurrency...surprised?
A couple of years ago JP Morgan CEO Jamie Dimon labelled Bitcoin as a ‘fraud’ and claimed he would take action against employees of the bank who got involved with it.
It would “appear” that the bank have had to walk their resistance to crypto back and Jamie Dimon has suffered a loss of face...WRONG! As we will argue later the banks opposition was towards Bitcoin -NOT blockchain and cryptos more generally- something that other journalists have failed to acknowledge and have concentrated excessively on.
The big news is that New York-based investment bank JP Morgan Chase is launching the first-ever major cryptocurrency backed by a U.S. bank. The digital token, dubbed “JPM Coin,” will be used to “instantly settle payments between clients” of its wholesale payments business.
The new token will run on top of the banks Quorom platform, this is the banks blockchain platform. It is similar in many respects to the Ethereum platform.
Currently the bank moves more than $6 trillion around the world every day for corporations involved with its wholesale payments business. The JPM coin will initially be trailed with a small fraction of these wholesale payments allowing for payments to be settled instantly and adding enhanced security to the procedure.
This will replace the less reliable and more time intensive wire transfers that currently underpin payments.
This is not as revolutionary as others in the press have made it out to be. Blockchain has been used in other areas of financial services like trade finance. In 2017 for example, using the Ethereum platform based on blockchain, the advisory firm Deloitte created a trade finance for an Indian private sector bank to reduce the time it needed to issue a LOC from 20 days to a few hours. Furthermore, the Japanese financial group MUFG plan have also just announced plans to launch a blockchain based payments network next year AND have launched a blockchain proof-of-concept with tech firm NTT for improving cross-border trades.
Its significance comes more from the fact that this is the first bulge-bracket bank to roll out a crypto commercially; AND that it is somewhat ironic given the banks previous stance towards bitcoin. Although this has been somewhat overhyped by the press given that Jamie Dimon’s opposition came from his valid scepticism of bitcoin (NOT crypto's more generally and their underlying blockchain technology).
As we prepare for a world where the essential components of global capitalism become underpinned by blockchain we can expect payments to become faster and in theory more secure. Lets focus on the technology implications, rather than all this rubbish about Jamie Dimon not 'liking bitcoin'.
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