So now it’s really getting interesting as the first of the big Banks are starting to get into the Cryptocurrency market. And it’s really just a matter of time before the other Banks follow in their footsteps. We’ll have to see how it all shakes out.
Mega-bank JPMorgan Chase (NYSE:JPM) recently announced that it will launch its own cryptocurrency, becoming the first U.S. bank to do so.
At first, this might sound like an odd move. After all, JPMorgan Chase’s CEO Jamie Dimon has been very outspoken against leading cryptocurrency bitcoin, going so far as to call it a “fraud.” However, there are some big differences between bitcoin, the more than 2,000 other existing cryptocurrencies (that’s not a typo), and the new cryptocurrency JPMorgan Chase is planning to create.
The new cryptocurrency will be called JPM Coin, and the purpose will be to speed up transaction settlement times. This could be specifically useful for international transactions, cutting settlement times from hours, or even days to settlements that occur in real time. Initially, JPM Coin will be used in just a small portion of the company’s business, but could become more widely used within the company if its usage appears to be worthwhile.
Also, JPM Coin will be a so-called “stable coin,” with its value pegged to the U.S. dollar. This is similar to some existing cryptocurrencies, such as Tether. In other words, you won’t see massive price fluctuations like you have with bitcoin, Ethereum, and others – a JPM Coin will be worth one dollar.
What about Ripple?
When I read the news that JPMorgan Chase was creating its own cryptocurrency, I asked, “why don’t they simply use an existing cryptocurrency that is designed to do the same thing?”