{"id":7535,"date":"2019-02-14T16:08:31","date_gmt":"2019-02-14T16:08:31","guid":{"rendered":"http:\/\/www.styledeals.co.uk\/blog\/jp-morgan-creates-first-us-bank-backed-crypto-currency\/"},"modified":"2019-02-14T16:08:31","modified_gmt":"2019-02-14T16:08:31","slug":"jp-morgan-creates-first-us-bank-backed-crypto-currency","status":"publish","type":"post","link":"https:\/\/www.styledeals.co.uk\/blog\/jp-morgan-creates-first-us-bank-backed-crypto-currency\/","title":{"rendered":"JP Morgan creates first US bank-backed crypto-currency"},"content":{"rendered":"\n
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\n JP Morgan chief Jamie Dimon has publicly criticised Bitcoin in the past
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US investment bank JP Morgan has created a crypto-currency to help settle payments between clients in its wholesale payments business.<\/p>\n

JPM Coin is the first digital currency to be backed by a major US bank. <\/p>\n

The crypto-currency, which runs on blockchain technology, has been used successfully to move money between the bank and a client account.<\/p>\n

JP Morgan says it sees potential in using digital coins to reduce risk and enable instant transfers.<\/p>\n

Although JP Morgan’s chief executive Jamie Dimon has publicly criticised Bitcoin – the first crypto-currency in existence – on several occasions, the bank says it has always “believed in the potential of blockchain technology”.<\/p>\n

“We are supportive of crypto-currencies as long as they are properly controlled and regulated,” Umar Farooq, JP Morgan’s head of Digital Treasury Services and Blockchain, wrote in an online Q&A page<\/a>.<\/p>\n

How do crypto-currencies work?<\/h2>\n

Virtual currencies can be used to pay for things in the real world, such as a hotel room, food or even a house. <\/p>\n

Digital tokens are held in online wallets, and can be sent anonymously between users. <\/p>\n

For this reason, crypto-currencies are attractive to people who want to make illegal purchases on the Dark Web – a part of the internet that is not indexed by search engines. <\/p>\n

What is blockchain? <\/h2>\n

A blockchain is a ledger of blocks of information, such as transactions or agreements, that are stored across a network of computers.<\/p>\n

This information is stored chronologically, can be viewed by a community of users, and is not usually managed by a central authority such as a bank or a government.<\/p>\n

The concept was designed to ensure security and anonymity for users, by preventing tampering or hijacking of the network.<\/p>\n

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\n Crypto-currencies are mined by powerful computers that solve complex maths problems
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Once published, the information in a certain block can’t be changed. If people try to tamper with that information, it becomes obvious.<\/p>\n

This is a powerful concept. Ten years ago, blockchain was combined with other technologies to create cryptocurrencies, and the first blockchain-based cryptocurrency was Bitcoin.<\/p>\n

Can anyone use JPM Coin?<\/h2>\n

No. JPM Coin is not for retail customers – it will be used internally by JP Morgan to enable the instantaneous transfer of payments between institutional accounts.<\/p>\n

When a JP Morgan client deposits money into an account, the money is converted into an equivalent number of JPM Coins, so $1m equals one million JPM coins.<\/p>\n

The client can then use the coins to perform transactions over the bank’s blockchain network Quorum with other clients, for example money movement or payments in securities transactions.<\/p>\n

Once the transactions have been performed, holders of JPM Coins can redeem them for US dollars from the bank.<\/p>\n

Does JP Morgan really need this?<\/h2>\n

Not everyone is convinced that JP Morgan needed to create its own digital currency.<\/p>\n

A blockchain is designed to be decentralised, so no one party has control over transactions being sent over the network.<\/p>\n

This is the opposite of the JPM Coin concept.<\/p>\n

“It doesn’t even need a blockchain at all because JP Morgan runs it. They could do it on a website and database they run,” David Gerard, author of Attack of the 50 Foot Blockchain: Bitcoin, Blockchain, Ethereum & Smart Contracts, told the BBC.<\/p>\n

“It isn’t like Bitcoin that aren’t under anybody’s control – it’s a centrally controlled thing that sounds vaguely like crypto-currency.”<\/p>\n

JP Morgan says that it is trialling crypto-currency and blockchain in order to speed up payment transfers, as well as reducing clients’ counterparty and settlement risk, and decreasing capital requirements.<\/p>\n

However, Mr Gerard is sceptical and does not believe that the bank needs the technology to speed up transactions. <\/p>\n

What about regulators?<\/h2>\n

JP Morgan’s Umar Farooq told the BBC that JP Morgan is using blockchain because of the improvements in speeds and security that the technology offers.<\/p>\n

Because of the privacy that blockchain enables, the bank envisions having a network whereby clients, such as large banks, can move coins between themselves on the network, and JP Morgan does not see these transactions.<\/p>\n

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\n JP Morgan says it is using blockchain to improve transfer speeds and security
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However, the bank stressed that all information required by regulators will continue to be tracked.<\/p>\n

Clients will only be able to use the blockchain network if they have been approved by regulators and have passed money laundering checks. <\/p>\n

“There is a possibility in the future of a blockchain that is private, except from the regulator,” said Mr Farooq. <\/p>\n

“There are various ways to make the regulatory regimes across the world stronger over time.”<\/p>\n<\/p><\/div>\n


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Image copyright Getty Images Image caption JP Morgan chief Jamie Dimon has publicly criticised Bitcoin in the past US investment bank JP Morgan has created a crypto-currency to help settle payments between clients in its wholesale payments business. JPM Coin is the first digital currency to be backed by a major US bank. The crypto-currency, … <\/p>\n","protected":false},"author":0,"featured_media":7536,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-7535","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general"],"_links":{"self":[{"href":"https:\/\/www.styledeals.co.uk\/blog\/wp-json\/wp\/v2\/posts\/7535","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.styledeals.co.uk\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.styledeals.co.uk\/blog\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/www.styledeals.co.uk\/blog\/wp-json\/wp\/v2\/comments?post=7535"}],"version-history":[{"count":0,"href":"https:\/\/www.styledeals.co.uk\/blog\/wp-json\/wp\/v2\/posts\/7535\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.styledeals.co.uk\/blog\/wp-json\/wp\/v2\/media\/7536"}],"wp:attachment":[{"href":"https:\/\/www.styledeals.co.uk\/blog\/wp-json\/wp\/v2\/media?parent=7535"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.styledeals.co.uk\/blog\/wp-json\/wp\/v2\/categories?post=7535"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.styledeals.co.uk\/blog\/wp-json\/wp\/v2\/tags?post=7535"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}