Jamie Dimon Eats his Words, Starts Development of JPM Coin

Apr 07, 2019   |   by John Liu   |   

Bigwig Banker Spells Doom and Gloom for Cryptocurrency

"It's a fraud...worse than tulip bulbs"

Jamie Dimon, on cryptocurrency.

It's no secret that banker Jamie Dimon has had a pretty poor outlook on cryptocurrency.

Time after time, the famed Wall Street executive has predicted doom for cryptocurrency. Dimon has described Bitcoin as a fad, and not just skepticism towards adoption, but utter disdain for blockchain technology.

However, despite the falling prices, $1.3 trillion dollars was exchanged via Bitcoin in 2018. This makes the Bitcoin ecosystem even larger than the economies of many countries.

From March 10-11 in 2019, 287,476 transactions occurred in a single day. That's 287,476 people who, despite Dimon's gloom and doom, chose to use Bitcoin over fiat currency.

Jamie Dimon Eats his Words

I'd fire any employee trading bitcoin.

Jamie Dimon

Looks like Jamie Dimon spoke too soon.

His company is now beginning development of JPM Coin (JP Morgan Coin). Each unit of a JPM Coin is backed by a dollar in JP Morgan's financial reserves. As a result, users of their proprietary blockchain can redeem JPM Coins for US dollars.

However, JPM Coins are not intended for use by ordinary individuals. They are designed for institutional use. The JPM Coin blockchain allows for near instantaneous settlement of payments between banks and customers, regardless of location. Using more traditional methods of wiring money, these large transactions could take over a day to settle.

Hold on...is it Actually a Cryptocurrency?

It's not a cryptocurrency.

Jerry Brito, executive director of Coin Center

Hold on for a second. Is JPM Coin a true cryptocurrency?

Many experts don't think so.

According to Coin Center, a blockchain think tank, to qualify as a cryptocurrency, a digital asset has to be open and permissionless.

What does this mean?

Firstly, access to a cryptocurrency cannot be restricted to a specific group of users. By restricting the cryptocurrency to only institutional clients, the firm is already violating a central tenet of cryptocurrency.

Additionally, cryptocurrency needs to be permissionless. In other words, there is no centralized organization forcing users to adhere to standards. The technological standards of a permissionless blockchain naturally emerge through community consensus.

A good example of permissionless technology is the Internet.

The internet is a set of commonly defined protocols, Although there is a standards-setting organization (the World Wide Web Consortium), people are free to deviate from their standards if they so please. Connections are established to IP addresses, which map to specific domain names. Once a connection is established, data is transmitted through a mix of HTML, CSS, and Javascript, allowing you to access a myriad of sources, including this blog.

The only thing keeping the Internet together is common consensus. Web designers have agreed to use the infrastructure and programming languages that we use today.

Real cryptocurrencies work in a similar fashion.

What Does it All Mean?

What does this all mean for the state of blockchain?

Watching Jamie Dimon eat his words is a glorious sight. Witnessing a mogul backpedal on his words is a victory for any believer in a decentralized currency of the people, for the people, and by the people.

Large companies are now willing to invest significant time, energy, and money into blockchain, validating it as a useful technology. Blockchain is no longer a niche technology tucked away in some dark corner of the Internet. There are no brakes on the crypto-train, and it will only push forward as time passes.

Follow us on Twitter for more interesting cryptocurrency articles.

John Liu