JP Morgan Created Its Own CryptoCurrency
JP Morgan, a leading global financial behemoth and one of the largest banking institutions in America, had its engineers create the “JPM Coin” – its very own cryptocurrency that is based on the same structure as a stablecoin.
JP Morgan announced:
“JPM Coin is a digital coin designed to make instantaneous payments using blockchain technology. Exchanging value, such as money, between different parties over a blockchain requires a digital currency, so we created the JPM Coin.”
“The JPM Coin isn’t money per se,” said Umar Farooq, head of Digital Treasury Services and Blockchain. “It is a digital coin representing United States Dollars held in designated accounts at JPMorgan Chase N.A. In short, a JPM Coin always has a value equivalent to one U.S. dollar.”
The JPM Coin is a digital cryptocurrency that will be used to instantly settle transactions between clients of the company’s wholesale payments business. Their customers will be able to use it for instant transfer of payments over a blockchain network.
Would people be able to cash out?
The coin can be redeemed for a U.S. dollar, so its value will largely remain stable, the bank said.
Where and how to use it?
When one client sends money to another over the blockchain, JPM Coins are transferred and instantaneously redeemed for the equivalent amount of U.S. dollars, reducing the typical settlement time, the bank said.
Is it secured?
JPMorgan said that it believed in the principle of blockchain technology, and expects its new JPM coin to yield significant benefits for blockchain use “by reducing clients’ counterparty and settlement risk, decreasing capital requirements and enabling instant value transfer.”
How will they protect it from hackers?
Per JP Morgan’s announcement, “JPM Coin will be issued on a permissioned blockchain protocol,” which means that they will decide who can have a wallet, what transactions they can carry out, and have the potential to seize or censor transactions across the JPM Coin network.
Per Coin Rivet, upon ‘permission,’ the client will essentially be given a combination of private key signatures and nodes that will facilitate transactions across JP Morgan’s network.
The immutability and resilience of such networks – as opposed to the highly centralized way that institutions typically clear payments on systems – is often the selling feature for this type of blockchain implementation JP Morgan is using.
Photo: Bitcoin Exchange Guide
If a malicious actor gains access to private keys or compromises the node network, could these immutable blockchains be locked in a state of turmoil with payments being withheld or transactions flooding the network and compromising the fees or settlement times on the network?
“Of course, attacks like this have been overcome on open blockchains, but it does require hefty (and sometimes contentious) actions to be taken to change the fundamental mechanics of the network. If JPM Coin is ever compromised in this manner, can the international bank really claim any benefits (especially in terms of immutability) over the centralized payment clearinghouse that operates today for fiat pegged transactions?
The answer is, time will tell. Only time will tell how robust the JPM coin and other cryptocurrencies really are.