JPM Coin caused an uproar in the cryptocurrency and financial market with its introduction of the JPM coin. However, the chaos was non-directed; the purpose of JPM Coin was unknown. Moreover, its contribution or competition to the cryptocurrencies was also unclear.
Nevertheless, JPM coin received harsh criticism from the crypto community including Ripple’s CEO Brad Garlinghouse. The reason cited for the same was lack of interoperability. The general perception is that JPM coin is as an isolated centralized cryptocurrency. However, it seems that there is more to it that it meets the eyes.
Beginning of a Banking/Blockchain Revolution?
JPM Coin is built on a distributed ledger based on Blockchain. While the JPM coin does not add any economic value to the system, a variety of centralized blockchains can be made to interact with each other. Hence, JPM coin might not just be an isolated incident but the beginning of a Blockchain revolution in banking.
According to Aaron Brown from Bloomberg:
” it (JPM) is designed to interact with any “standard” blockchain. It needs to be a blockchain to play with other blockchains and I think the distributed ledger means that JPM Coin will circulate outside the JPMorgan private blockchain. Those other ledgers might be private or public, centralized or distributed (probably mostly private and centralized), but the overall system is distributed. ”
Tokenization of the Economy
Furthermore, the increased interoperability between banks might also start to include other institutions in it. Hence, the centralized or decentralized entities will get an opportunity to transact in that ‘token’ as well.
While this will help the cryptocurrency markets as a whole, it might hurt the price of Ripple’s XRP massively. Until now the XRP’s investments are majorly driven on its partnerships with banks and financial institutions. Therefore, if JPM cryptocurrency starts to provide utility and execute transactions as efficiently as XRP; XRP’s demand would decrease considerably as Ripple would start losing its partners.
“I think JPMorgan will earn seigniorage creating JPMCoin. I think the exciting potential is circulation outside the JPMorgan private blockchain.”
Nivesh from Engineering Background is a full-time Crypto Journalist at Coingape. He is an atheist who believes in love and cultural diversity. He believes that Cryptocurrency is a necessity to deter corruption. He holds small amounts of cryptocurrencies. Faith and fear are two sides of the same coin. Follow him on Twitter at @nivishoes or mail him at nivesh(at)coingape.com