JP Morgan launched its own stablecoin on February 14 and after being used for just one transaction, it has been applauded and called by some as the game changer for digital assets, reported Bloomberg.
The company hopes that its clients soon use JPM coins for cross-border payments, which would pose serious competition for the more prominent blockchain company, Ripple. This new coin is a direct challenge to Ripple and its digital currency, as per Tom Shaughnessy, principal at Delphi Digital which is a crypto research boutique in New York. The third largest cryptocurrency as per market cap, XRP could be used to carry out faster transactions for lower cost with respect to cross-border payments.
Ripple has been in the business for long and has been aiming to replace the SWIFT network used by banks, individuals, and businesses to carry out financial transactions. While JP Morgan registers transactions worth $5 trillion in wholesale payments every day, such a step could have a huge impact on its rivals. Shaughnessy said:
“This is a huge slap in the face for Ripple. Ripple’s target market is cross-border payments and remittances and now JPMorgan’s effort is a direct threat.”
As per the publication, Ripple’s CEO Brad Garlinghouse dismissed the impact of the coin’s launch and tweeted saying:
“As predicted, banks are changing their tune on crypto. But this JPM project misses the point- introducing a closed network today is like launching AOL after Netscape’s IPO. 2 years later, and bank coins still aren’t the answer.”
The San Francisco-based company has claimed that it has more than 200 banks and payment providers on its Ripple Network, which also includes Japan’s Mitsubishi UFJ Financial Group Inc. and Standard Chartered PLC, as per their website.
Travis Kling, the Los Angeles-based founder of crypto hedge fund Ikgai Asset Management had this to say:
“JPM’s project is much more evolutionary than revolutionary — it is utilizing a private, permissioned blockchain technology called Quorum, which is much closer to a Google Sheet than a Bitcoin. The project is clearly competing directly with Ripple Labs and their centralized cryptocurrency XRP.”
The JPM coin, unlike XRP, is pegged to the dollar, thus offering a stable medium of exchange for the people, while XRP was trading above $3 in early 2018 and has gone down to 30 cents currently. Shaughnessy added:
“The JPM Coin is a stable coin whereas XRP is anything but stable. That’s going to be a very contentious point for banks who don’t want the currency in which they make payments to be volatile.”
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