Our weekly editorial brought to you by a Coinme team member.
This week: Brent Lyman, Private Client Advisor
In 2017, J.P. Morgan’s CEO Jamie Dimon said Bitcoin is a fraud.
“If you’re stupid enough to buy it, you’ll pay the price for it one day,” he said.
Fast-forward a year later when he backtracked on those comments, saying the underlying technology (Blockchain) had promise. Well, yesterday Jamie introduced “JPM Coin” to the bank’s technology inventory. In summary, the coin will be a beta test for J.P. Morgan’s internal wholesale transactions. It’s estimated that J.P. Morgan moves around 6 trillion dollars around the globe so if the “beta test” is successful JPM Coin may be integrated on a mass scale, perhaps even into retail deposits at some point.
What I find sad is the media responses to today’s news. One article in particular from Barron’s claims that JPM Coin has “killed the Bitcoin dream.”
We’ve never heard that before…
To me, articles like this are not just disappointing but they are also very misleading so I wanted to take some time to distinguish some key facts when comparing Bitcoin to JPM Coin: JPM Coin will be controlled and centralized while Bitcoin is permissionless and decentralized. In reality, the only feature both JPM Coin and Bitcoin have in common is blockchain technology, but it’s important to understand each runs on their separate blockchain. In fact, Bitcoin’s blockchain (or network) is the largest in the world, and nobody can “turn off” Bitcoin, not even big bad Mr. Dimon himself. (Sorry, Barron’s.)
The positive news here? One of the largest banks in the world (with a chairman who has been a vocal detractor of Bitcoin) proved they think digital assets have value. These interbank transactions that will be settled using JPM Coin will go from taking days or week to potentially taking just hours. That’s a game-changer for any bank, especially one as large as J.P. Morgan. Costs will be cut, efficiencies will be created, manual audits will decrease, and compensation (or jobs) can be cut.
I expect more banks to create and launch digital currencies of their own in the coming years for these same reasons, all while Bitcoin will remain king. Why? Because Bitcoin is the people’s “coin.” No bank, company, government, or corporation owns it. Instead, you do! The more we as people invest, spend, and utilize Bitcoin the less reliant we are on government, banks, and corporations.