On Thursday, the crypto community notched a win when JPMorgan Chase & Co. announced it had launched its own cryptocurrency, the JPM Coin.
But had it, really? According to Jerry Brito, executive director at Coin Center, a nonprofit research and advocacy center focused on cryptocurrency and decentralized technology, the U.S. banking behemoth did not actually launch a cryptocurrency but more an in-house-built payments system.
“There’s a lot of confusion,” Brito told MarketWatch. “I see folks referring to it as a cryptocurrency. It’s not a cryptocurrency. A cryptocurrency is one that is open and permissionless, if you want to download it, you don’t need permission; you just need some software.”
And the JPM Coin is anything but permissionless or available for download.
It will run on a private blockchain developed by the company with help from the Ethereum Enterprise Alliance, and coins will be issued by the bank, as opposed to cryptocurrencies that run on public blockchains such as ethereum, a common place where crypto-related ventures can issue their own coin through what is known as an initial coin offering (ICO).
Read: What is an ICO?
Brito added that it’s through no fault of JPMorgan’s
that confusion has arisen. “I think they do a good job of explaining it on their website,” he said. “They say it’s not public, unlike cryptocurrencies, [and] they say it’s not permissioned.”
Furthermore, as industry pundits have concluded, it’s not a stablecoin:
J.P. Morgan is launching a stablecoin. Soon every bank will issue one as well.
Closed systems for the world’s elite will always be beaten by open systems built for the common person.
Long Bitcoin, Short the Bankers!
— Pomp 🌪 (@APompliano) February 14, 2019
“In case of some stablecoins (e.g., USDC) only exchange customers can mint (buy with US$) or redeem (sell for US$) stablecoins but anyone can own or trade them,” JPMorgan states by way of explaining the difference between stablecoins and the JPM Coin.
And as for those criticizing JPMorgan’s CEO for an apparent U-turn: Think again.
“There aren’t any inconsistencies between what [CEO] Jamie Dimon has said publicly about bitcoin and JPMorgan’s foray into distributed-ledger technologies and applications, because JPM Coin isn’t a true cryptocurrency,” said Kevin McMahon, executive director of emerging technologies at SPR, a digital tech consultancy.
“It’s not intended to replace or even compete with cryptos like bitcoin. This is an application of distributed-ledger technologies (DLT) to improve specific business cases that JPMorgan and their institutional clients have.”
The attention being paid to JPM Coin didn’t move the needle in the cryptocurrency market, with the price of bitcoin
, the world’s largest digital currency, holding steady just below $3,600 a coin.
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