JP Morgan breaks ground and creates a crypto-currency, JPM Coin

Friday, February 15th 2019 - 08:54 UTC

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Although JP Morgan's CEO Jamie Dimon has publicly criticized Bitcoin, the bank says it has always “believed in the potential of blockchain technology”.

US investment bank JP Morgan has created a crypto-currency to help settle payments between clients in its wholesale payments business. JPM Coin is the first digital currency to be backed by a major US bank.

The crypto-currency, which runs on blockchain technology, has been used successfully to move money between the bank and a client account. JP Morgan says it sees potential in using digital coins to reduce risk and enable instant transfers.

Although JP Morgan's chief executive Jamie Dimon has publicly criticized Bitcoin - the first crypto-currency in existence - on several occasions, the bank says it has always “believed in the potential of blockchain technology.”

“We are supportive of crypto-currencies as long as they are properly controlled and regulated,” Umar Farooq, JP Morgan's head of Digital Treasury Services and Blockchain, wrote in an on line Q&A page.

Virtual currencies can be used to pay for things in the real world, such as a hotel room, food or even a house. Digital tokens are held in online wallets, and can be sent anonymously between users.
For this reason, crypto-currencies 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 across a network of computers.

This information is stored chronologically, can be viewed by a community of users, and is not usually managed by a central authority such as a bank or a government.

The concept was designed to ensure security and anonymity for users, by preventing tampering or hijacking of the network.

Once published, the information in a certain block can't be changed. If people try to tamper with 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.