The financial world’s eyes were all fixed on Wall Street Banker J.P. Morgan when it announced its’ plans to launch the JPM coin in February 2019. The JPM coin is a blockchain-powered digital currency designed to facilitate lightning fast payments, initially for commercial clients of J.P. Morgan on a B to B basis.
Although the JPM coin is live, it appears that J.P. Morgan has so far has limited its rollout to a few select clients. Reports from CNBC Tuesday say that a major tech firm plans to use the JPM coin as a token to make global payments.
The JPM coin is fundamentally different from other cryptocurrencies like bitcoin. In fact, you will not find the JPM coin on commercial exchanges for purchase, and the coin is not defined as crypto currency. The JPM coin is essentially a token or stable coin that is pegged to the U.S. dollar and is redeemable at a ratio of 1:1 to clients of J.P. Morgan.
The idea behind the JPM coin was to speed up funds transfer or the payment process utilizing a stable coin sitting on top of a private blockchain similar in some respects to the Ethereum blockchain.
What is the JPM coin?
The JPM coin is defined merely as a tool or mechanism utilized to facilitate the transfer of funds between J.P. Morgan and his clients for payment business purposes. Umar Farooq the head of Digital Treasury Services and Blockchain at J.P. Morgan says, JPM is “a digital coin designed to make instantaneous payments using blockchain technology.”
J.P. Morgan believes that the JPM coin will make transactions more efficient and hassle-free than the traditional methods of use. The JPM coin is a digital token that carries the value of a U.S. dollar.
How does it work?
When a client engages in a transaction involving the JPM coin they must have fiat or U.S. funds in an equivalent amount securing the transaction. The client will then be issued or have available the JPM coin in an equal amount to traverse the private Quorum blockchain network for delivery to another party, in the current case model, another J.P. Morgan client. The JPM coin or stable coin can only be utilized for transactions associated on the Quorum blockchain network. Currently the JPM coin is exclusive to transactions taking place across the blockchain network between J.P. Morgan clients. The recipient of a JPM coin can redeem the tokens at their nearest J.P. Morgan bank for U.S. dollars.
The difference between the JPM coin when compared to other digital coins like bitcoin is that the coin is not available to the general public, and currently not all J.P. Morgan business clients can avail themselves to the use of the product or service.
Because the transfer of funds transpires over the blockchain network, settlement is near instantaneous and is therefore is a fast, efficient, and cost-effective process that is likely to garner rapid adoption among commercial clientele in the not too distant future.
J.P. Morgan states that “The JPM Coin isn’t money per se. It is a digital coin representing United States Dollars held in designated accounts at J.P. Morgan Chase N.A. In short, a JPM Coin always has a value equivalent to one U.S. dollar.”
Many in the community believe the JPM coin does not meet the standards of a cryptocurrency because of its private and commissioned existence, as well as the fact that transactions are checked by the bank.