US investment bank JP Morgan has created a crypto-currency to help settle payments between clients in its wholesale payments business.
US investment bank JP Morgan has created a crypto-currency called JPM Coin
JPMorgan (JPM) said it is the first American bank to create and successfully test a digital coin.
The so-called JPM Coinis the first digital currency to be backed by a major US bank.
The crypto-currency, which runs on blockchain technology, has been used successfully to move money between the bank and a client account.
Based on a Blockchain technology, the JPM Coin has several characteristics:
This news shocked many people who remember when, in 2017, JPMorgan CEO Jamie Dimon described Bitcoin as a "fraud," "stupid" and "far too dangerous" to people who traded it.
Moreover, Dimon said that he supported blockchain technology for tracking payments and his company would fire anyone at the bank that traded in bitcoin "in a second".
He soon after backed off of that harsh assessment, saying that he regretted his comments, adding that he believes cryptocurrencies are real and had to be examined individually.
But... Does JP Morgan really need a crypto currency?
Not everyone is convinced that JP Morgan needed to create its own digital currency.
JP Morgan says that it is trialling crypto-currency and blockchain to speed up payment transfers, as well as reducing clients' counter-party and settlement risk, and decreasing capital requirements.
However, a Blockchain is designed to be decentralized, so no one party has control over transactions being sent over the network. This is the opposite of the JPM Coin concept.
Mr Gerard - the author of Attack of the 50 Foot Blockchain: Bitcoin, Blockchain, Ethereum & Smart Contracts - is skeptical and does not believe that the bank needs the technology to speed up transactions and he told the BBC:
"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. It isn't like Bitcoin that aren't under anybody's control - it's a centrally controlled thing that sounds vaguely like crypto-currency."
What will happen in next months is not easy to be predicted, but Blockchain technology now is officially in the paradise of technologies used by the most important US Investment Bank.