Last week, JPMorgan Chase announced the creation of a prototype ‘digital coin’ the megabank dubbed JPM Coin. The cryptocurrency (crypto) world immediately reacted with consternation.
Much of the controversy concerns semantics – albeit semantics that represents key questions surrounding crypto. Just what is crypto anyway? And what is it for?
What JPM Coin is For
The bank’s primary spokesperson for JPM Coin is Umar Farooq, Head of Blockchain Initiatives at JP Morgan’s Corporate and Investment Bank. “JPM Coin is a digital coin designed to make instantaneous payments using blockchain technology,” Farooq explains. “Exchanging value, such as money, between different parties over a blockchain requires a digital currency, so we created the JPM Coin.”
For now, the bank is limiting JPM Coin transactions to large institutional customers only, until such time as regulators have had a chance to weigh in. “JPM Coin is currently a prototype,” Farooq adds. “As we move towards production we will actively engage our regulators to explain its design and solicit their feedback and any necessary approvals.”
In many situations, bank transactions are already instantaneous – so why bother with JPM Coin? “With all the activity, you can see correspondent banks like JPMorgan are coming under extreme pressure because their role as middlemen is in jeopardy, so now they’ve positioned themselves as ‘Yes, I have a network that my clients can do business and provide real-time execution,’ which on the Swift network is not the case,” according to Oliver Bussmann, an active blockchain and crypto company advisor and CEO of Bussmann Advisory, who also served in CIO roles at SAP and UBS. “That’s a game changer.”
Bussmann singles out the aging Swift transaction network as the primary target of JPM Coin. “My belief is, it’s faster, cheaper and more reliable than the Swift environment, where you have an error rate of 10%-plus,” he adds. “Banks like JPMorgan especially want to be one of the first movers.”
Read the entire article at https://www.forbes.com/sites/jasonbloomberg/2019/02/22/jpm-coin-from-jpmorgan-chase-vs-crypto-fans-whos-missing-the-point/.
Intellyx publishes the biweekly Cortex newsletter, advises companies on their digital transformation initiatives, and helps vendors communicate their agility stories. As of the time of writing, none of the organizations mentioned in this article are Intellyx customers. The author does not own, nor does he intend to own, any cryptocurrency or other cryptotokens, neither long nor short. Image credit: public domain (Library of Congress).
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