JPMorgan Chase boss Jamie Dimon banking on digital currency

JPMorgan Chase boss Jamie Dimon banking on digital currency

JPMorgan Chase boss Jamie Dimon banking on digital currency

The bank sees three areas where the digital coin can be used - in global payments for large corporate clients, in securities transactions, and, finally, for major corporations that use J.P Morgan's treasury services business.

"Every major bank in the world is assessing the situation and developing a crypto/blockchain strategy".

The New York-based bank has taken the much-awaited step of launching its own digital token, CNBC reported Thursday.

As for the third application, large corporations that hold United States dollars in JP Morgan's treasury services will be able to replace the dollars held in subsidiaries for JPM Coins.

Just a few weeks after JP Morgan declared cryptocurrencies like Bitcoin to only have value in a post-capitalist dystopia, the $2.5tn banking giant announced its own blockchain-based "JPM Coin" - should we be anxious?

The concerns of industry executives and experts on the long-term growth trend of XRP is that if JPMorgan uses JPM Coin to settle payments between its clients, as the bank said, it will put XRP in direct competition with JPM Coin.

CNBC goes on to point out that each JMP Coin is redeemable for one U.S. dollar, meaning its value should not fluctuate. In trials scheduled to begin in a few months, it plans to handle a small fraction of those payments using a homegrown blockchain.

Though holders of digital currencies may seize on the news that a major financial institution is issuing its own crypto as bullish for the asset class, retail investors will probably never get to own a JPM Coin.

When the tokens are used for a payment or security purchase on the blockchain, JP Morgan will destroy the coins and give customers back a commensurate number of dollars.

Furthermore, Farooq was also noted by CNBC as stressing that there are more potential use-cases for JPM Coin in the future. "2 years later, and bank coins still aren't the answer". New York-based Signature Bank launched its blockchain transaction platform January 1, reported CNN Business. DePaolo then added that blockchain technology by banks will likely spread quickly, at one point suggesting that "if you're not into blockchain technology as a bank, you won't be around in three to seven years".

JP Morgan, one of the world's biggest banks, whose CEO Jamie Dimon once referred to Bitcoin as a "fraud" has now made a decision to get into the digital currency space by creating its currency which will be used to settle transactions between clients of its wholesale payments business instantly. The costs of processing each transaction are significantly lower as well because the blockchain infrastructure ensures the transparency and security of the transaction, while also providing an immutable account of the amount sent and received.

The JPM Coin will be issued on Quorum Blockchain and subsequently extended to other platforms.

"We successfully tested the movement of money between a client account and a JPMorgan account using the new technology", Umar Farooq, head of digital treasury services and blockchain, said in the presentation. Nevertheless, JP Morgan will be the first bank to move beyond rhetoric and actually launch a bank-backed cryptocurrency in the US.

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