J.P. Morgan’s JPM Coin is Not A Cryptocurrency
On Thursday, the largest U.S. bank J.P. Morgan announced that it has created and successfully tested a cryptocurrency named “JPM Coin”. This initiative sparked a lot of discussion in the crypto community.
According to the description on J.P. Morgan’s official website, the JPM Coin is a digital token representing United States Dollars held in designated accounts. Each JPM Coin is redeemable for one U.S. dollar, which is similar to stablecoins. It is designed to be used in the instantly settle transactions between institutional accounts of its wholesale payments business.
As this initiative is the first real-world digital coin usage in the banking industry, it sparked a lot of discussions. Some believed that JPM Coin can be marked as an unprecedented move for banks in exploring the crypto world while others are questing whether the JPM Coin is a cryptocurrency essentially.
Hong Shuning, an early adopter of Bitcoin in China argues that JPM Coin is just a digital bill on the consortium blockchain instead of a cryptocurrency, which has nothing special. He added that many banks have conducted this kind of blockchain-based innovation in their business and only J.P. Morgan calls it a “coin”.
Hong is not the only one denies JPM Coin’s cryptocurrency identity. Jerry Brito, executive director at Coin Center, a nonprofit cryptocurrency and decentralized technology research and advocacy center, considered that instead of launching a cryptocurrency, the bank is just offering an in-house-built payment system as accessing JPM Coin still requires permission from the bank.
The computer scientist and cryptographer Nick Szabo also agree with Brito’s point and tweeted that the JPM Coin is similar to Petro, both of which lack “the predominant source of value that distinguishes cryptocurrencies from bank money: trust minimization”.
Ironically, the bank’s CEO Jamie Dimon used to claim the largest cryptocurrency was a “fraud’” in late 2017 while his managers have consistently said blockchain and regulated digital currencies held promise. As they say, “if you can’t beat them, join them”. J.P. Morgan is making use of the name of “cryptocurrency” to boost its own exposure.