Who will win in the crypto war? JP Morgan or Ripple (XRP)?

Author: Julia S
Date: 
February 18, 2019
Read time: 
3 minutes

JP Morgan, one of the oldest banks in the USA, has presented Ripple Labs Ltd. with an unfortunate Valentine’s Day present.

JP Morgan, one of the oldest banks in the USA, has presented Ripple Labs Ltd. with an unfortunate Valentine’s Day present.

Banks were obviously never going to use XRP for settlements and enrich Ripple Inc (who owns more than half of all XRP). They would rather enrich themselves instead!

By launching their own digital coin on the blockchain network, JPM Coin, the financial institution is planning to leave decades-old networks like SWIFT far behind and become a global blockchain for financial institutions. But wasn’t it exactly what Ripple (XRP) was going to do?

The official statement on the website of the $340 billion banking giant clarifies that 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.”

Several facts about JPM Coin

The important difference between the JPM Coin and other stablecoins is that the nature of their collateral is often not clear. With the first US bank-backed cryptocurrency, on the other hand, customers will always be able to redeem their coins 1:1 against the U.S. dollar.    

It’s also interesting to note that one of the prospective use cases for the JPM Coin is the international payments between corporations.

Last but not least, due to the nature of the permissioned blockchain, which JP Morgan has built, only banks, broker-dealers and corporates passing J.P Morgan KYC will be able to transact with these coins.

With these characteristics presented, Joe Weisenthal, co-host of Bloomberg’s "What’d You Miss?" said that the JPM Coin should absolutely obliterate Ripple.

Think about it, let’s say you were in the business of transferring money, why would you take on the exchange rate volatility risk associated with having Ripple as a bridge currency, when you could have a fiat-coin backed by JPMorgan. No brainer.

Wasn’t Ripple on the same mission?

Ripple has got high-level partnerships with regional banks spread across the globe. The clients of those banks benefit from the real-time and instantaneous settlement.  Many times this feature was reported to be the response to SWIFT that takes up to two days to slash the settlement.

But with the launch of the JPM Coin, Ripple has taken on a second direct competitor.

Tushar Jain, a general partner at Multicoin Capital, said that JPMorgan will wipe the floor with Ripple.

Banks were obviously never going to use XRP for settlements and enrich Ripple Inc (who owns more than half of all XRP). They would rather enrich themselves instead!

Does this new development mean, though, that you need to sell all of your XRP due to JP Morgan’s new coin?

And what is the right thing to do when the market fluctuates in response to similar news?

Find out in the ultimate beginners guide on how to invest in cryptocurrency!

Posted by Julia S

Julia is a blockchain enthusiast and a content writer with a zest for technologies. Her final goal is to help readers find what they need, understand what they find, and use what they understand appropriately.

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