Recently, JPMorgan Chase revealed that they are launching their own cryptocurrency type called “JPM Coin”. This will be supported by USD on a 1-for-1 basis.
In the cryptocurrency domain, JPM Coin is part of the same “stable coin” model as Tether and USD Coin (“USDC”).
Tying cryptocurrencies into a secure fiat currency such as USD to prevent volatility. This can be a huge inhibition supporting their use as a currency. For monies to have worth, they want to possess two properties:
- An exchange medium
- A store hold of worth
As you can not use cryptocurrencies to purchase very much, they do not work well as a trade medium. Seeing the volatility of cryptocurrencies as an asset class does not store very well value. They perform badly on both points. Even though a poor medium of trade, something such as gold functions as a store hold of riches that can help support its worth.
What separates this Coin from the rest?
JPM Coin suggests something distinct from the mainstream choices and isn’t a conventional cryptocurrency entirely since it will not trade on a public exchange. To begin with, it’s sponsored by JPMorgan Chase, the biggest financial institution in the United States by asset value. This is also among the largest banking institutions around the globe. Thus, it does not have the same amount of counterparty risk related to cryptocurrencies trading on startup trades. A number of these are plagued with fraud, bankruptcy, and cybersecurity problems.
JPM Coin is a payment system comprising of what the lender characterizes as “instant value transfer”. Part of this overall cryptocurrency trend reflects how modern payments systems are not quick enough and how cross-border payments are ineffective. Payments may take days or weeks to transfer. In theory, there’s absolutely no reason why money can not transfer at precisely the same rate as information. Yet wire transfers continue to be regular banking technologies.
Can JPM Coin become a competition to Bitcoin, Ethereum, and others?
Right now, the conclusion is that JPM Coin isn’t a direct competition to Bitcoin, Ethereum, and other cryptocurrencies in the mainstream.
JPM Coin is now available exclusively to JPM’s institutional customers. More precisely, it currently serves as an internal payment system that needs consent to join. It does not function on a public network such as most of the favorite conventional cryptocurrencies. Only big company customers may use the system to move payments to one another only if the involved parties are also JPMorgan customers with accessibility.
JPMorgan is utilizing it as a means to attempt and enlarge its banking ecosystem by making network effects. It’s unknown if JPMorgan could roll out JPM Coin for its wider public (e.g., retail banking customers), but probably not until it demonstrates profitability for their biggest banking customers.