JPMorgan CEO Jamie Dimon called Bitcoin a “fraud” in 2017, saying that cryptocurrencies are “worse than tulips bulbs” at the time. He tempered his view a few months later when he said he regretted calling Bitcoin a fraud.
As of Thursday JP Morgan Chase, the largest bank in the United States, shocked the financial community by releasing its own coin.
JPM coin was designed as digital asset designed to work as a medium of exchange using cryptography to secure the transactions in control of the creation of additional units, and to verify the transfer of assets. There is nothing mentioned in the base definition about mining. Tokens, even coins with reversible transactions, can be cryptocurrencies.
On the other side of the token Bitcoin is meant to be digital cash, as outlined in the whitepaper. Transactions cannot be reversed in the base protocol, as they can with fiat bank accounts and credit cards. The nature of “cash” is that he who holds it, essentially owns it.
It’s really no different with fiat, except you sometimes need lawyers to ensure your ownership. The bank may steal or lose your funds. In Bitcoin, as long as you hold your keys, you own your money. You “become your own bank.”
Two other aspects of the Bitcoin definition are important, as well. Bitcoin is decentralized, meaning there is no central point of control. Instead of a complicated command structure of account representatives and middlemen, Bitcoin operates on a set of rules called consensus. If a transaction meets these rules, it is included in the blockchain, which is the heart of recording Bitcoin transactions.
The use of cryptography doesn’t make something a cryptocurrency. Cryptography is everywhere. You’ve already used some form of cryptography today if you looked at virtually anything online. Cryptocurrency is a type of digital asset. There are other types of digital assets, such as bank coins and utility tokens. JPM Coin is not even a cryptocurrency.
JPM Coin is a bank coin.
The JPM Coins will be issued to JP Morgan clients when they deposit money to a particular JPMorgan account. The coins can then be used to transfer money to someone else’s account over the blockchain. The recipient of JPM Coins would then exchange them for fiat currency. The technology would reduce the typical settlement time for transactions, the bank says in its handy FAQ section, without mentioning any details about how much these instant blockchain-based transactions will cost customers.
Image Source: JPMorgan Chase
However, the company said that the JPM Coins are in testing for the time being, and only institutional clients will have access to the pilot program, mentioning that savings may be passed on to their customers:
JPM Coin is currently designed for business-to-business money movement flows, and because we are still in a testing phase, we don’t have plans to make this available to individuals at this stage. That said, the cost-savings and efficiency benefits would extend to the end customers of our institutional clients.
In other words, you won’t be able to use JPM Coin to trade other cryptos on exchanges. Well, not yet anyway. The bank noted that JPM will run on the Quorum Blockchain at first, and then will be extended to other platforms and will eventually be operable on all standard blockchain networks.
JP Morgan Chase is a financial Mega Whale and counts many of the world’s most profitable companies as clients. A new, faster settlement system may very well pay off. But right now, at least, it’s not stepping on Bitcoin’s turf.
The fact that there is a bank making a new interbank settlement network really says nothing about Bitcoin, or impinge on Bitcoin’s ability to develop.
Bitcoin is alive and well. Would crypto enthusiasts want to trade their bitcoin for a bank-issued digital currency? Probably not. Bitcoin continues to exist outside of the conventional financial system, and that part of its appeal isn’t going away. The media is hyping it up as part of their marketing plans to launch their new product. Bitcoin is in is own asset class JP Coin is just noise to benefit a bank nothing more.