Is The Future Of Ripple’s XRP Coin In Jeopardy With JP Morgan’s Digital Asset For Financial Transactions?
JP Morgan could damage Ripple’s intention to become the new company that processes international financial transactions between companies and banks. JP Morgan Chase will be issuing its own digital asset called JPM Coin. According to the bank, the intention is to settle transactions for customers without having to wait long periods of time and reducing costs.
This is going to be the first coin issued by a bank in the United States and that will have an impact in the digital currency market, at least on Ripple. The new token will be running on top of its Quorum platform and will be operable o all standard blockchain networks as well.
Virtual currencies such as Bitcoin (BTC) were released to revolutionize the international monetary system and work in a decentralized way compared to banks and governments. However, financial institutions are starting to see larger potential in these new technologies. JP Morgan moves around six trillion US dollars a day and it wants to optimize the transfers it processes with the JPM Coin.
The new coin will be different than other cryptocurrencies because it cannot be mined as Bitcoin or Litecoin (LTC): Indeed, the cryptocurrency will be just used by JP Morgan to settle transactions in just a few seconds.
Travis Kling, the founder of the Crypto Hedge Fund Ikigai Asset Management, commented:
“JPM’s project is much more evolutionary than revolutionary – it is utilizing a private, permissioned blockchain technology called Quorum, which is much closer to a Google Sheet than a Bitcoin. The project is clearly competing directly with Ripple Labs and their centralized cryptocurrency XRP.”
Ripple is a company that is currently trying to help institutions and banks to process cross-border payments in a fast and easy way compared to older systems such as SWIFT. In order to do so, it uses the XRP cryptocurrency that allows its services to work faster and in a cheaper way.
With this new coin created by JP Morgan, it can be much more difficult for Ripple to expand its services and products to new firms. JP Morgan is an institution that has been operating in the market for several years and that has a large list of customers from all over the world. Companies would rather trust an established participant that is offering similar services as Ripple rather than a fintech startup that was operating for just a few years and has just 200 partners.
The JPM Coin has three different use cases: international payments, securities transactions and the replacement of the US dollar for large companies in the treasury service business. With the SWIFT network, the payments can take more than a day to be processed, something that changes with the JPM Coin. Although it is not ready, the bank will be testing it during this year with some of the companies the firm works with.
If it was difficult for Ripple to compete against SWIFT, now there is one more institution trying to enter the cross-border payment market with fast and reliable service.
Although this might be negative for the XRP digital asset, XRP is being traded stably around $0.3033 and it has a market capitalization of $12.5 billion.