The crypto world was shown some love (or at least validation) on Valentine’s Day when JP Morgan created JPM Coin. This is the first digital currency created by a major U.S. bank. JPM Coin is pegged to the U.S. dollar, which will reduce the volatility of the coin’s value. The digital token will facilitate intra and international payments for large corporations (JPM states that it has many other potential uses). JPM Coin uses a private ledger, which means only JPMorgan’s institutional clients are able to use it. Most of the other cryptocurrencies use a public ledger that anyone can join. Block times for JPM Coin are claimed to be around 25 milliseconds. To put this in perspective, Bitcoin’s block time is about 600,000 milliseconds. Ethereum’s is about 20,000 milliseconds, or 20 seconds. This enables significantly faster transactions to occur, especially when you compare it to wire transfers which can take more than a day to settle.
Brad Garlinghouse, CEO at Ripple, stated that a bank-issued digital token leads to one of two scenarios. Either all banks around the globe put aside their differences and adopt the same digital token. Or two: banks that weren’t included in the original (JPMorgan) private group start issuing their own token with their own rules. The latter seems to be the most likely scenario. We’ll most likely see a BoA Coin, Wells Fargo Coin, Citicoin, etc. In either case, we’re going to see blockchain technology play a crucial role in the financial industry (as well as many others). Umar Farooq, CCO at JPMorgan, said, “I think this is an endorsement of the fact that we continue to believe blockchain is the future. But this is a nascent technology, still developing, so I don’t think you’re going to see dramatic changes in the next 12 months.” Whether in 12 months or 12 years, if you can identify where opportunity lies for blockchain and cryptocurrency, you have the potential to create a lot of wealth in the future.