Looking into Global Powerhouses’ JP Morgan and Facebook’s Entrance Into the Crypto Market
There have been several reports regarding Facebook launching a virtual currency that would be targetting the remittance market in India through its WhatsApp application. Meanwhile, JP Morgan Chase announced that it will be launching a cryptocurrency called JPM Coin and it will be used to settle payments among its clients.
A few years ago, the CEO of JP Morgan Chase, Jamie Dimon, attacked Bitcoin (BTC) in many different ways. Indeed, he has questioned its intrinsic value and investors’ decision to purchase this digital asset.
Both companies, Facebook and JP Morgan Chase, want to have control over their digital assets. That will make them centralized currencies that might not even have an open ledger, like Bitcoin or Litecoin (LTC), have.
The JPM Coin will be a stablecoin that will be pegged to the U.S. dollar with a 1:1 ratio. The company will be using its cash reserves in order to back the coins that it will be creating. This will allow the firm and its customers to process large payments in just a few seconds and everything backed by JP Morgan. It might be even possible for smaller clients to make everyday purchases.
Anthony Pompliano, founder and partner at Morgan Creek Digital, JP Morgan could use the JPM Coin o become a Central Bank and print infinite money out of thin air. Thus, for him, these coins are the biggest threat that digital currencies have faced since Bitcoin was launched.
Private blockchains such as the ones that these two companies want to create are not going to provide benefits to users. Indeed, they are going to be controlling them and using their data. Users’ privacy will be also in danger. Cryptocurrencies run without any centralized authority, which is very positive for people. There are no third parties deciding who can transact or gathering information to sell it to other firms later.
Alec Ziupsnys, the Chief Strategy Officer at Rhythm Technologies, wrote on Twitter, that China banned 23 million people last year from buying plane or train tickets because their social credit scores were too low. Governments are also analyzing the possibility to issue Central Bank Digital Currencies (CBDCs) in order to have a larger control over their citizens.
Decentralized virtual currencies have provided a larger degree of anonymity to users, and the freedom for them to decide what to do with their funds without any third party intervention.