While 2018's cryptocurrency boom may be over, US investment bank JP Morgan has launched its own digital coin to help settle payments between its clients as part of its wholesale payments business.
JPM Coin, the first digital currency backed by a major US bank, runs on blockchain technology and has already successfully been used to move funds between the bank and a client's account.
JP Morgan plans to use digital coins to help reduce risk and enable instant transfers for its customers despite the fact that its chief executive Jamie Dimon has publicly criticized Bitcoin in the past.
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The bank's JPM Coin is not intended for retail customers and the cryptocurrency will be used internally by the company to handle transfers of payments between institutional accounts.
To use JP Morgan's new cryptocurrency, a client first has to deposit money into an account and then those funds are converted into an equivalent number of JPM Coins. Clients can use the coins to perform transactions over the bank's blockchain network Quorum and once they are completed, JPM Coins can be redeemed for US dollars from the bank.
However, critics of JP Morgan's digital currency bring up the fact that blockchain is decentralized by design with no one party controlling transactions sent over the network. JPM Coin works the opposite way as the bank has complete control over any transactions made using its cryptocurrency.
In the future though, JP Morgan envisions a network where clients, such as large banks, can move coins between themselves on the network without the bank being able to see the transactions.
To use JPM Coins, clients will first have to be approved by regulators and pass money laundering checks to ensure that no illegal activity is being conducted.
Time will tell if JPM coin is successful though its launch could help spur another round of interest in cryptocurrency after Bitcoin's price plunged last year.
Via The BBC
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After working with the TechRadar Pro team for the last several years, Anthony is now the security and networking editor at Tom’s Guide where he covers everything from data breaches and ransomware gangs to the best way to cover your whole home or business with Wi-Fi. When not writing, you can find him tinkering with PCs and game consoles, managing cables and upgrading his smart home.