J.P. Morgan creates digital coin representing fiat for payments

[Ozark]

Many are calling JPM Coin a cryptocurrency despite the digital coin being limited for use by the multinational bank’s institutional clients.

J.P. Morgan had created and successfully tested a blockchain-based digital coin called JPM Coin this month.

This was announced by the American multinational investment bank on 14 February 2019.

J.P. Morgan added that the bank is the first to create such a digital coin, which will be used for instant payment transfers for institutional accounts.

The bank said that JPM Coins represents US dollars and its value will always be one US dollar. It is held in designated J.P. Morgan Chase N.A. accounts, and can be transferred and redeemed for the equivalent amount in U.S. dollars, which will reduce settlement time.

The JPM Coin is said to be “currency agnostic,” which will allow it to be used to represent other major currencies besides the US dollar in the future.

J.P. Morgan said that the JPM Coin was successfully tested by having money transferred between a client and a J.P. Morgan account using the digital coin.

JPM Coin runs on Quorum, which is an enterprise-focused version of Ethereum developed by J.P. Morgan.

The digital coin will be used exclusively by institutional customers such as banks, broker dealers and corporates that have passed J.P. Morgan’s know-your-customer requirements.

J.P. Morgan said that the JPM Coin is currently a prototype that would be tested by a small number of J.P. Morgan institutional clients. The bank plans to expand the pilot program in late 2019.

The bank plans to engage with regulators to explain JPM Coin’s design and to ask for feedback and approval.

The bank also said that it is too early to say how the JPM Coin would impact its other businesses, but plans to continue working with their clients to discover other use cases for the digital coin.

While it is too early to assess the digital coin’s impact, J.P. Morgan believes that its cost-saving and efficiency benefits will extend to the customers of the bank’s institutional clients.

Following J.P. Morgan’s announcement, people were quick to call JPM Coin as a “cryptocurrency”, with Ben Walsh of Barron’s going as far as to call it as the bitcoin killer.

However, many in the cryptocurrency field have said that the JPM Coin is not a cryptocurrency.

Economist Nouriel Roubini said in a tweet that JPM Coin is private, permissioned, and centralized goes against the characteristics of a cryptocurrency, and shouldn’t be labelled as such.

Coin Center executive director Jerry Brito said in another tweet that JPM Coin is a digital coin on the same level as Fortnite V-Bucks, World of Warcraft Gold, and Tencent QQ Coins.

J.P. Morgan CEO Jamie Dimon have been known for his criticism of bitcoin, but believes that the blockchain technology, which is the technology where bitcoin and other cryptocurrencies operate on, is a positive thing for finance.

J.P. Morgan released a report in January 2019 saying that the blockchain technology would provide improvements to payment systems in the future.

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