News Flash – JP Morgan launch the JPM Coin
JPMorgan has become the first major US bank to create and successfully test a digital coin: The JPM Coin.
The JPM coin is transferable over a blockchain between the accounts of the bank’s institutional clients, who will purchase and redeem them for dollars at a fixed 1:1 ratio. The coin is defined as a fiat currency as by definition, the JPM is not a cryptocurrency:
- Fiat currency is “legal tender” backed by a “central government.” It can take the form of physical dollars (for example paper Federal Reserve notes), or it can be represented electronically, such as with bank credit. The government controls the supply and you can pay your taxes with it.
- Cryptocurrency is not “legal tender” and it is not backed by a central government or bank (it is decentralized and global). Its form is more like bank credit sans the bank (in that it is represented digitally, but not backed by a bank or government). An algorithm controls the supply and you can’t pay your taxes with it (instead you have to pay taxes on it).
The JPM coin is a ‘stablecoin’ that can be redeemed at a 1:1 with the US Dollar, thus reducing risk of fluctuating valuation. The coins will be transferred over JP Morgang’s own private blockchain, Quorum Blockchain, which will facilitate near-instantaneous settlement of money transfers and will, according to the bank, mitigate counterparty risk. Combining shared databases and cryptography, blockchain technology allows multiple parties to have simultaneous access to a constantly updated digital ledger that cannot be altered.
The technology will be implemented with a small number of clients within the coming months…..