It has been a little over a month since J.P. Morgan announced the release of its own cryptocurrency but debates still continue as to whether the JPM Coin should be considered a cryptocurrency or not.
Many experts point out that blockchain technology is the only thing JPM shares in common with traditional cryptocurrencies. Everything else about it, some say, shows that it is merely a digitized representation of fiat currency, in this case, the dollar.
Stern School NYU Professor and Crisis Economics author Nouriel Roubini did not mince words when he tweeted his objection to calling JPM a cryptocurrency. ” It is private not public, permissioned not permissionless, based on trusted authorities verifying transaction not trustless, centralized not decentralized,” he tweets. “Calling it crypto is a joke.”
Forbes contributor and Finextra reporter Madvhi Mavadiya echoed the same sentiment.
“If JP Morgan’s new coin operates privately and is only used for money transfers between the lender and its clients, it would not operate on a public network in the same way that cryptocurrencies such as bitcoin or ethereum do,” Mavadiya writes.
She also adds that while traditional cryptocurrencies operate on permissionless public networks, JPM will run on Quorum, a blockchain network that will be closely monitored by the bank.
Not a stable coin either
Another Forbes contributor and recognized IT industry analyst Jason Bloomberg says JPM is not a stable coin either. He says that J.P. Morgan has “reserves far in excess of the number of JPM Coins it is likely to issue.” He also adds that the JPM Coin was made for large bulk payments and not trade. Both are in direct contrast to the current nature of a stable coin.
A stable coin is a cryptocurrency that is pegged to a fiat currency or gold. Its value is not as unpredictable as the bitcoin, for example, since it will depend on how the underlying asset performs in the stock market. While considered more stable, there are lingering doubts about the stable coin, some even dismissing it as a scam.
Still a prototype
To quell the pushback from crypto experts and enthusiasts, J.P. Morgan points out that the JPM Coin is still a work in progress. Head of the bank’s blockchain research and projects Umar Farooq said as much in a statement posted on their website. “JPM Coin is currently a prototype,” Farooq explains. “As we move towards production we will actively engage our regulators to explain its design and solicit their feedback and any necessary approvals.”
In the same statement, Farooq also addressed the questions raised about their closely monitored Quorum blockchain network. “The JPM Coin will be issued on Quorum Blockchain and subsequently extended to other platforms,” Farooq says. “JPM Coin will be operable on all standard Blockchain networks.”
Since the bank has yet to announce when the JPM Coin will be released, real life application will be the ultimate basis of how this virtual currency will be seen.
For now, however, debates as to whether it is a cryptocurrency or not are most likely to continue.