JPMorgan Chase, headed by noted Bitcoin critic Jamie Dimon, shocked the cryptocurrency world Thursday by announcing that it was launching its own cryptocurrency, JPM Coin. The token is to be used by banks within JPMorgan’s network to transfer large sums of money, and would be based on the Quorum blockchain, a privatized fork of Ethereum. The announcement sent the crypto world into a tailspin, with some accusing Dimon of hypocrisy, while others were concerned what the announcement meant for public cryptocurrencies like Bitcoin and Ethereum.
JPMorgan Goes Private
The JPM Coin itself will function as a stablecoin for the JPMorgan, backed dollar for dollar by its reserves. Banks wanting to use the system to transact with JPMorgan will see funds converted from dollars to JPM Coin at one end and converted back to dollars at the other, making the most of the speed and reduced cost offered by a blockchain-based token. Don’t expect to see it on Binance or CoinMarketCap anytime soon though – this will be a private, completely centralized token only available, initially at least, to selected institutions dealing with JPMorgan.
The coin came about, according to the bank’s head of blockchain development Umar Farooq, on the back of client demand, illustrating the long-held belief that institutions have secretly been enquiring about blockchain technology, even as the industry took a very public bashing throughout 2018. The announcement also puts a dent in the suggestion that banks will use public projects for their blockchain needs – JPMorgan, at least, has evidently preferred to create their own in-house system, and the chances are high that they are not the only ones working on such a technology.
Bad News for XRP?
Reactions to the news were swift and varied. Many reacted simply to the headlines and immediately feared that this was another attempt by big banks to destroy Bitcoin, although in truth the two have nothing to do with each other. If anything, the fact that such a high-profile Bitcoin critic has allowed his bank to embrace the technology behind it is actually bullish. Attention then turned to XRP, the token with the closest ideological ties to JPM Coin, with some claiming that it was at much more risk as a result of the news:
If it turns out that the Blockchain/Coin framework turns out to be a good one for banks transferring money around, then the JPM Coin should absolutely obliterate Ripple
— Joe Weisenthal (@TheStalwart) February 14, 2019
If other major banks take JPMorgan’s lead and begin to develop their own private blockchains then this could seriously impact Ripple’s target market. On the other hand, if the JPM Coin proves to be a huge success then JPMorgan could find themselves able to license out the technology to other banks, which would have the same effect. Either way, the news is certainly more worrying for XRP fans that Bitcoin maximalists.