JPMorgan launching its cryptocurrency: good or bad?

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Monetary phenomenons: getting to understand Bitcoin
February 11, 2019
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JPMorgan launching its cryptocurrency

The news have soared in the last couple of days about JPMorgan launching its cryptocurrency. I have figured out we should look into why is JPMorgan doing this and how it might benefit the market. You can see articles everywhere: New York Times, CNN, CNBC and more.

The player: understanding its position

Unless you already knew, JPMorgan Chase is the largest bank in the United States and the sixth largest in the world in 2018, if we look at assets (over $2.5 trillion!). So, news like these are music for our ears, cryptocurrency investors and enthusiasts. It is great to see such a large player intending to do something with the market.

In order to understand more about this bank, we should get a little bit of a context. First, there was The Manhattan Company, founded on September 1st, 1799. More than a 150 years later, it merges with Chase National Bank (founded in 1877) to form Chase Manhattan. A few decades later, Chase (a standard bank) buys JPMorgan & Co. (an investment bank), resulting in JPMorgan Chase. Around 3 years later, the recently-merged bank buys Bank One, making the resulted corporation the largest credit card issuer in the United States.

Motivation behind JPMorgan launching its cryptocurrency

Why is JPMorgan Chase one of the few banks interested in cryptocurrency? Especially considering that the CEO, Jamie Dimon, said he doesn’t “really give a shit” about Bitcoin.

Apparently, the company is going ahead of the executive’s vision, planning to launch the JPM digital coin. JPMorgan transfers around $6 trillion every day and some of the transactions might take even a few days. In their vision, JPM should impact the bank’s operations by reducing the duration of wire transfers, some of which take even a few days.

Advantages of JPMorgan launching its cryptocurrency

Firstly, considering a player the size of JPMorgan chase enters the market, it is only good because cryptocurrencies continue regaining the public’s trust, after the “bubble” of late 2017/early 2018. Another bull market will not occur unless the people start understanding that Bitcoin is serious. And now, the only way to do that is for big players to enter the market. Luckily, this has started to happen: Bitcoin ETFs, Bakkt and now JPMorgan Chase! This can’t be a bad thing and it will do good in the future, when the dots start to connect.

Secondly, another great advantage is that the JPM coin will be backed up by physical dollars. This is amazing, because it will bring, beside the prestige of the bank, stability and a lot of trust. Reduced volatility might result in a change of the market’s general trend. Bitcoin and the other coins might be able to leverage from this player.

The future: bright or pitch black?

I believe the future looks bright and this has been a smart move from JPMorgan Chase. Just as I said here, banks will need to embrace, in one way or another, cryptocurrency in order to survive. Paper money will not live much longer, in the form they currently exist. This system (fractional-reserve banking and the ability of printing infinite amounts of money) might change or might be replaced. If it were replaced, cryptocurrencies are one solution to the existing problem. But, at the moment, they are not credible enough. JPMorgan launching its cryptocurrency might be a step further, but such initiatives are necessary in order to create a stable market.

We don’t know yet when we will see the JPM coin. It might not be even available to the entire public, who knows? The best thing to do know is stay tuned and follow what other initiatives like this can happen. It is important to show support and be though in order to win the battle with the current bear market.

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