The immense potential of trust, transparency, privacy, and security lying in blockchain technology is echoed in a step taken by one of the most prominent U.S. banks. JP Morgan recently launched its own blockchain-based coin that goes by the name of JPM Coin.
Institutions have stayed away from cryptos up until now due to the prevalence of scams, illegal and fraudulent activities owing to the lack of regulations. With JP Morgan adopting blockchain, this negative image that is built regarding the blockchain world overall, mitigates to some extent and show some faith in the technology. There is potential in this technology that can help revamp various operational workflows like logistics, record keeping, global payments etc. for good and banks can benefit hugely from it. Institutions can also benefit from the global network provided by blockchain with almost instantaneous international settlement capabilities, a process which can take days even in the modern day.
JP Morgan is currently shifting some of its activities on a blockchain network where JPM Coin serves as the representative of value. JPM Coin is a stablecoin which is backed by the U.S. dollar, meaning each coin has exactly 1$ value and is not prone to the issue of volatility. These coins can be redeemed as U.S. dollars by the clients of the banks. The blockchain used for JPM Coin is developed on Quorum, an Ethereum-based distributed ledger built by the bank which cannot be used by other banks.
This step of adopting blockchain is being taken by the bank in order to enhance the transactional speed in some of its settlement operations between institutions. The service is currently being offered for business-to-business settlements and being on blockchain, settlement time is much less than typical. Traditional international payment systems require even days for finalizing settlements but with JPM Coin, this is done almost instantaneously.
Bitcoin challenges authority and that is the reason banks and other financial institutions have largely been against cryptocurrencies. This move of JP Morgan can be interpreted by some as a move that is aimed at killing the ‘Crypto Knight‘ that challenges the banking world with its very own sword, blockchain.
Bitcoin being the ‘Knight’ and leading whole crypto world from the front.
Founder & Partner at Morgan creek Digital, Anthony Pompliano (Pomp) tweeted;
From 1834 to 1971, someone could redeem gold for their dollar bills.
Today J.P. Morgan claims you can redeem $1 for every JPM Coin.
Eventually the bank will get greedy and not allow redemptions too.
Just a matter of time.
— Pomp ? (@APompliano) February 17, 2019
With JPM Coin hosted over a blockchain, $1 for every JPM Coin should be possible. Trust and transparency are one of the prime factors that give blockchain the importance that it has right now. All the happenings of a decentralized blockchain network are visible to everyone on the network. Once a transaction takes place, it becomes immutable, meaning it cannot be changed. There is no central controlling party that keeps all the record instead, the record is kept by decentralized nodes. With decentralized nodes, a fabric of trust is established making sure no forgery of records takes place. Every node carries the record of transactions and validates to make forgery too hard, and trust is automatically established within the network.
Decentralization can prove to be beneficial in organizations or corporations where sensitive operations might require strong levels of transparency. Decentralized nodes in a blockchain network make sure everything operates in coherence with each other and are always coordinating with each other making sure no hidden transaction with ill-motives go through.
The fact that a bank, an entity against which the entire world of cryptos is poised, is opting for the technology lying underneath cryptocurrencies, strongly suggests that the tech is strong. JP Morgan opting for blockchain signals other institutions that it is time they started to look for their very own coins or tokens as it can help them revamp their workflows by increasing transparency in their systems and making transactions more fast and global. Developments are being made in the blockchain and crypto world at a very rapid pace in the form of tech development and regulatory proposals and if institutions and organization do not want to get left behind on this technological innovation, adoption is the only answer.
Besides institutional and organizational interest, JPM Coin also triggers more mainstream adoption to the world of cryptos and blockchain. Bitcoin’s decentralized nature presents an alternative to the banking world and that is what makes banks the prime opponents of cryptos. With banks adopting blockchain, the very tech powering cryptos, the prospects of this technology get highlighted in the mainstream public and present a narrative that ‘it is surely the technology of the future’. With JP Morgan adopting blockchain, it is clear that this technology is here to stay and it isn’t going away. JPM Coin just cleared the path for other financial institutions to follow and trust the technology.