JP Morgan is rolling out the first US bank-backed digital currency.

by | Feb 26, 2019 | Insights, News

As you may know, cryptocurrencies have been in the spotlight for a few years now, and it was just a matter of time for big U.S corporations to get behind the idea of using the blockchain technology for financial operations.

J.P. Morgan Chase has created the first digital coin backed by a U.S bank, the JPM Coin.

What is it exactly and how does it work?

According to JP Morgan, the JPM Coin “is a digital coin designed to make instantaneous payments using blockchain technology. Exchanging value, such as money, between different parties over a blockchain requires a digital currency, so we created the JPM Coin.”

“The JPM Coin isn’t money per se. It is a digital coin representing United States Dollars held in designated accounts at JPMorgan Chase N.A. In short, a JPM Coin always has a value equivalent to one U.S. dollar. When one client sends money to another over the blockchain, JPM Coins are transferred and instantaneously redeemed for the equivalent amount of U.S. dollars, reducing the typical settlement time.”

Will it be available for all people including individual consumers?

According to JP Morgan, the digital currency will be tested with a small number of their institutional clients, with plans to expand the pilot program later this year, this is because of the JPM Coin being designed for “business-to-business” transactions, therefore, there are no plans right now to expand to individual consumers yet.

What’s the difference between the JPM Coin and Bitcoin?

Each JPM Coin is redeemable for a single U.S. dollar, so its value shouldn’t fluctuate, similar in concept to so-called stablecoins. Unlike other cryptocurrencies that have a very volatile price and doesn’t have any kind of back-up, the JPM Coin has a fixed value of 1:1 US Dollars and a robust cybersecurity platform and strong regulations backing it up.

At GBS Group we are qualified to do cryptocurrency accounting and believe that this is a trend that other big institutions will follow in the future, so stay up to date with more news about this soon.