MercoPress. South Atlantic News Agency

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

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.