JP Morgan first backed by a US bank

American investment bank JP Morgan has created a cryptocurrency to help settle payments between clients in its wholesale payments business.

JPM Coin is the first digital currency to be backed by a major American bank. The cryptocurrency, which is powered by blockchain technology, has been used successfully to move money between the bank and a customer’s account. JP Morgan says it sees potential in the use of digital currencies to reduce risk and enable instant transfers. Although JP Morgan CEO Jamie Dimon has publicly criticized Bitcoin, the first cryptocurrency to exist, on several occasions, the bank says it has always “believed in the potential of blockchain technology.

We support cryptocurrencies as long as they are properly controlled and regulated,” wrote Umar Farooq, Director of Blockchain and Digital Treasury Services at JP Morgan, on an online question and answer page. Virtual currencies can be used to pay for things in the real world, like a hotel room, food, or even a house. Digital tokens are kept in online wallets and can be sent anonymously between users. For this reason, cryptocurrencies are attractive to people who want to make illegal purchases on the Dark Web, a part of the Internet that is not indexed by search engines.

A blockchain is a ledger of blocks of information, such as transactions or agreements, that are stored on a computer network. This information is stored chronologically, can be viewed by a community of users, and is generally not managed by a central authority such as a bank or government. The concept was designed to ensure the safety and anonymity of users, by preventing tampering or hijacking of the network. Once published, the information in a certain block cannot be changed. If people try to alter that information, it becomes obvious.

This is a powerful concept. Ten years ago, blockchain was combined with other technologies to create cryptocurrencies, and the first blockchain-based cryptocurrency was Bitcoin. No. JPM Coin is not for retail clients; JP Morgan will use it internally to allow instant transfer of payments between institutional accounts. When a JP Morgan client deposits money into an account, the money is converted into an equivalent amount of JPM coins, so $ 1 million equals one million JPM coins.

The customer can then use the coins to conduct transactions through the bank’s Quorum blockchain network with other customers, for example, movement of money or payments in securities transactions. Once transactions are completed, JPM Coins holders can exchange them for US dollars from the bank. Not everyone is convinced that JP Morgan needed to create its own digital currency. A blockchain is designed to be decentralized, so neither party has control over the transactions that are sent over the network.

 

 

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