JPMorgan is already facing severe criticism from the cryptocurrency industry just a day after it announced it would launch its own token, ‘JPM Coin.’
Garlinghouse: JPM Coin ‘Misses The Point’
The plan, which would ostensibly make JPMorgan the first US bank to issue a token with a verifiable use case, surprised commentators when executives revealed it to the press this week.
“The applications are frankly quite endless; anything where you have a distributed ledger which involves corporations or institutions can use this,” Umar Farooq, head of JPMorgan’s blockchain operations told CNBC.
JPM Coin, Farooq said, would see testing in the coming months, rolling out to applications in international settlement, securities and treasury services.
Little technical details have surfaced about the token, with Farooq’s comments suggesting it would be a closed private blockchain with a wholly-centralized issuance.
It would be tied to the US dollar, he added, and exchangeable for cash within the ecosystems it serves.
Reacting to the reveal, however, others were less than impressed. Brad Garlinghouse, CEO of payment network Ripple, likened JPM Coin to previous plans from banks elsewhere, arguing it was a case of ‘too little, too late’ in the age of public blockchains.
“… [T]his JPM project misses the point – introducing a closed network today is like launching AOL after Netscape’s IPO,” he added in social media comments.
Garlinghouse has faced skepticism of his own over the past year amid centralization concerns that continue to swirl around Ripple and its associated cryptocurrency, XRP.
Not A Cryptocurrency?
Continuing on JPM Coin meanwhile, Jerry Brito, executive director of Coin Center, said the industry shouldn’t call it a cryptocurrency at all.
“It’s not a cryptocurrency,” he told MarketWatch.
A cryptocurrency is one that is open and permissionless, if you want to download it, you don’t need permission; you just need some software.
Others went beyond definitions, arguing JPMorgan would help cryptocurrency gain wider publicity.
“They’ve finally figured out there’s a lot of money to be made in this business,” Bubba Trading strategist Todd Horwitz added to CNBC Thursday.
Bitcoin pioneer, Nick Szabo, meanwhile likened JPM Coin to Venezuela’s virtual currency, the Petro, pointing out that both require trust, thus deafeating the entire purpose of using a blockchain.
Correct. JPM Coin and its near-twin the Petro lack the predominant source of value that distinguishes cryptocurrencies from bank money: trust minimization. https://t.co/5Xfq9B5I65
— Nick Szabo ? (@NickSzabo4) February 15, 2019
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Author: Esther Kim