The First American Giant Bank in the Domain of Cryptocurrencies

The First American Giant Bank in the Domain of Cryptocurrencies

JP Morgan Chase, one of the most famous American banks, started working in the field of cryptocurrency after issuing JPM Coin. Jamie Dimon CEO of JP Morgan Chase has named Bitcoin a “fraud” in September 2017; however, he changed his mind after a while, to the extent that he introduced cryptocurrencies a risk for a business of the banks under his management. In reaction to this turnabout, Alan Silbert, an old timer bank CEO, said in a tweet: “Backpedaling is the first step in the program towards walking the path.”

According to Umar Farooq, Blockchain project manager, this bank will use JPM Coins in a small part of daily $6 trillion transactions. Transactions of this cryptocurrency will be made in any time of the day in a few seconds. As Umar Farooq said, this cryptocurrency will have three functions for JP Morgan Bank. Huge international payments transaction, security transactions and the last one, for big companies which apply JP Morgan’s treasury service instead of the dollar to pay their subsidiaries around the world.

Considering his speech, there are two major reasons for entering the banks to the cryptocurrencies domain. The first one is strategic. If cryptocurrencies are a risk for JP Morgan business, it would be better to get involved in it rather than just watching their businesses being challenged while you are out of it. The second reason is competitive. The payments of global wholesale include transferring huge amounts of money across the banks as a part of complex international transactions. Such transfers sometimes take time about a whole day. Using cryptocurrencies in such transactions will quicken it.

After publishing this news, some experts challenge the idea of JPM Coin. In their view, one of the main features of cryptocurrencies is its decentralization and not having a central network control. Moreover, joining such a network does not need asking permission and even in cases such as Bitcoin involving more uses help increase its security. On the other hand, JPM Coin is offered on Quorum platform which primarily requires the bank permission and confirmation.

In defining Quorum, JP Morgan Bank says: Quorum is a version of Ethereum which provides high speed and power to process financial transactions between permitted and confirmed users.

Each JPM Coin is equal to a dollar, and it doesn’t have volatility compared to that of the dollar, so it is called stablecoin too. It can finally be said that JP Morgan, as one of the biggest world banks, requires a quicker system to process massive financial transactions, but JPM Coin is not currently a rival for Bitcoin. It is expected for some JPM Coins to be issued in the coming months.