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In the wake of PayPal announcing its decision to enter the cryptocurrency industry early next year, Bitcoin (BTC) has continued its strong performance and has been hovering around $ 13,500 for nearly a week. In this regard, the payment giant’s foray into the cryptocurrency market has been hailed as a game changer, especially when it comes to improving the mainstream perception of the digital asset industry as a whole.
Not only that, JPMorgan Chase announced that its native digital currency offering – the JPM Coin – has finally been rolled out for mainstream use by one of the company’s technical partners. The token is designed to facilitate JPMorgan Chase’s various cross-border monetary transactions.
The origins of the JPM coin can be traced back to early 2019, when the banking giant announced its plans to release a dollar-backed cryptocurrency that would eventually be used to process its domestic and international transfers. Now, JP Morgan appears to have finally fulfilled its promise to build a solution that could potentially save the global financial industry hundreds of millions of dollars in peripheral costs like processing fees, high taxes, and more.
Make an impact
As it stands, JPMorgan is one of the largest players operating in the global payments landscape, with the company reportedly facilitating transfers of over $ 6 trillion in over 100 countries on a daily basis. Brian Behlendorf, executive director of Hyperledger, an enterprise-grade licensed blockchain framework, told Cointelegraph that, according to his estimates, the move most likely won’t have any kind of major impact on the market, especially since JPMorgan’s payment network is isolated from those not fungible with them:
“Consumers probably won’t even be aware of it – perhaps it will come as reduced fees for moving money between accounts or other types of transactions, etc. Professional investors may notice that they have new types of assets available in their portfolios in the form of these stablecoins. but they are not really “investments” as much as cheaper ways to transfer money “.
However, Behlendorf admitted that, overall, the move represents a further step towards mainstream adoption of cryptography and technology that is now ready for prime-time industrial use.
With the implementation of a centralized token, it goes without saying that blockchain technology is finally poised to generate some serious returns for its users. Paul Brody, principal and global innovation leader for blockchain technology at Ernst & Young, told Cointelegraph that even though people are just starting to realize the financial potential of this technology, blockchain has quietly generated substantial value for many. companies in recent years.
Additionally, Brody believes that reliable payments for business users from big-brand banks will have a positive impact on the market overall because much of the work done so far in the chain is operational, but payments are still being completed. chain. Additionally, the entry of JPM Coin could help “more businesses feel comfortable with the idea of closing the loop and managing an entire business process on-chain.” He added:
“The global and cross-border payments market hasn’t had much competition until recently, so I think adding new operators, regardless of their technology, will have a positive impact. What matters a lot is that for business-to-business payments, if you can make payments a part of a fully digital business contract, you can greatly reduce the cost of executing a cross-border business agreement, and that’s quite revolutionary.
Behlendorf also pointed out that JPM Coin-like private trade tokens have been in production for a few years, mainly as settlement mechanisms for trade finance. Not only that, he said they have also been implemented in other banking, securities and bond markets in Asia and Europe: “US corporate blockchain networks have generated business value in other ways as well, from supply chain traceability to KYC and compliance. legislation, and so on, including JPM’s IIN network. “
JPMorgan creates a dedicated blockchain group
In a recent interview, JP Morgan’s global head of wholesale payments said the launch of JPM Coin and a few other “behind the scenes moves” prompted the banking giant to create a new company called Onyx. The unit will allow the company to focus on its various ongoing efforts on blockchain and digital currency.
Onyx reportedly has more than 100 staff members and was founded with the goal of commercializing JP Morgan’s various blockchain and crypto projects, moving existing ideas from their research and development stage to something more tangible.
Asked about their future plans and whether crypto factors are impacting the company’s next scheme of things more, a media relations rep for JP Morgan told Cointelegraph that there are no additional announcements beyond what has already been unveiled. lately.
Finally, on October 28, the bank announced that it would rename its blockchain-based Interbank Information Network, or IIN, to “Liink,” as well as introduce two new applications – Confirm and Format – which have been developed for specific purposes of the account validation and fraud elimination for its customers. Liink will be part of the Onyx ecosystem and will allow participants (over 400 financial institutions) to collaborate seamlessly with each other.
Blockchain technology and banks go together
It is not unlikely to think that the marriage of blockchain technology and the banking sector could completely revolutionize the way in which day-to-day business transactions are facilitated by financial institutions around the world. For example, decentralized transaction frameworks can not only make cross-border transactions cheaper, but can also substantially improve the transparency aspect.
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However, Behlendorf said the banking sector has been largely digital for decades, with very few organizations shipping around physical hard currency or other material goods as a method of settling payments between financial institutions, adding:
“What’s new is using a DLT as a settlement layer rather than relying on human audits and regulatory trust. Cash digitization is a very different matter, and Alipay / Wechat Pay and Paypal and Venmo etc. They’ve probably done a lot more to accelerate the demise of physical money than any blockchain today or likely will in the next decade. “
However, he added that, as convenient as these digital payment means may be, there are some drawbacks due to their underlying architecture: “We should be very cautious about giving up the anonymity provided by physical money.”
