J.P. Morgan Chase has given hope that the crypto world is here to stay after announcing that it will introduce its first coin, the JPM Coin as reported by CNBC. The move by this bank which is the largest in the US and sixth in the world can legitimize blockchain as the vehicle for cryptocurrencies.
JPM Coin is a stable coin. One JPM Coin is equal to one dollar; that means that for every one JPM Coin in circulation, there will be a backup of one US dollar held by the bank. According to initial reports, the currency will not be traded freely like bitcoin. J.P. Morgan’s focus is on its clients and not a universal currency at the moment.
J.P Morgan Chase which controls a cash flow of about $6 trillion in a day will be the first US bank to roll out a cryptocurrency. According to the company, it will roll the application of its new coin in a few months and allow several large corporations to test it.
Initial applications of JPM Coin
Talking to CNBC, Umar Farooq who is the head of blockchain projects at the bank said the applications of this coin are ‘endless.’ The bank believes that the coin will lower the client’s costs by making transfers instant and secure. According to Farooq, this coin will achieve the following;
- International payments for large corporations
At the moment, international transfers occur through wire transfer which is characterized by delays due to time zones and deadlines. The new coin will allow the completion of transactions in real-time irrespective of the time of the day or location of the sender and the receiver.
- For secure transactions
Through the blockchain, there is an assurance that no one can hack the payments because the blocks cannot be manipulated. Institutional investors can thus send and receive money instantly.
- Store of value
The bank notes that some of its clients hold dollars in its subsidiaries across the world. The coin can replace those reserves and give its clients a universal currency for such instances. We expect more applications in future.
The move by this bank is a significant headline because its chairman and CEO, Jamie Dimon has had negative views on the cryptocurrency world.
Precisely according to Bloomberg in September 2017, he said that bitcoin is worse than tulip bulbs and termed it as a fraud. He said that if he found out that his employee was trading in bitcoin, he would fire them in a second.
However, in January 2018 Jamie was interviewed by Fox business and regretted his outbursts on bitcoin. He said that he believed in blockchain and its capabilities.
J.P. Morgan has contributed and invested heavily in blockchain research.
The bank has the ‘Blockchain Center of Excellence’ which leads efforts for application of a shared ledger within its banking system. The bank already has a payment solution known as quorum which according to its website aims at increasing efficiency, streamline global payments, enable payment settlement and status tracking on a 24/7 basis.