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JPM Coin Is the Wildest Big Bank Idea in Many Years

101 points by adventured 8y ago

nfriedly 8y ago
Mr. Robot really was a dramatized version of real life.
aphextim 8y ago
I'll put my money on an actual tech company coordinating with banks rather than a bank itself for the mere fact that a tech company most likely will know it better and attempt to do it more securely than outsource consultants to put it together for me. IBM's World Wire - https://www.youtube.com/watch?v=GtQY8Jfa4NA https://www.youtube.com/watch?v=GtQY8Jfa4NA Also full disclosure I have been buying a little bit of stellar here and there since it was less than 2 cents, before IBM even partnered with Stellar. Now IBM attempting to coordinate many banks worldwide to be able to transfer money seamlessly. I'm still waiting for the day we get payed per minute our salary and have to manage cash flows rather than balances.
- solotronics 8y ago
  I had a realization the other day when I rented a sports car on vacation. In the future you will just show up to a garage and scan QR code to view and accept contract for car rental. It would charge you by the minute so you can drop it off whenever you want. Also, if something came up and you wanted to leave the car somewhere else or switch cars, the cost to transport the car to another "share garage" would be easily calculated.
  - Nursie 8y ago
    They have this with car clubs all over the place already.
  - dmitriid 8y ago
    Car2Go, DriveNow, Sunfleet, countless others have existed for years with more-or-less literally that model.
- Nursie 8y ago
  > I'll put my money on an actual tech company coordinating with banks rather than a bank itself Banks basically are tech companies these days. I'd put JPMC's development capabilities over and above IBM's any day, and their domain knowledge much higher. (Disclaimer - I've worked for both, but obviously speak for neither)
  - aphextim 8y ago
    I guess people can change, I just trust someone who went into the space willingly rather than doing it only after they realize there is money to be made and fear of being left behind. https://99bitcoins.com/jpmorgan-ceo-jamie-dimon-says-bitcoin-is-a-fraud/ https://99bitcoins.com/jpmorgan-ceo-jamie-dimon-says-bitcoin...
    - Nursie 8y ago
      I'm not asking you to trust that the intentions of either one. I wouldn't. IBM is a technology company that wishes it wasn't involved in technology any more. They want to be a business services company, and that's where they make a lot of their money. The tech side is old, mostly using out of date working practices, creating software slowly and (IMHO) badly. JPMC are a huge bank and will do anything that makes money. But OTOH - so what if he thinks BTC is a huge fraud? That doesn't stop them using a blockchain in a different way, does it?
- qaq 8y ago
  https://github.com/jpmorganchase https://github.com/jpmorganchase You are selling JPM short they have pretty good tech talent and a lot of resources and domain expertise.
BubRoss 8y ago
I actually thought this was always going to happen, I just didn't know which bank would do it first, and I'm surprised it is a bigger bank. Think about what a bank account is. You give up your money for a voucher and the bank keeps a ledger of all transactions. Turning it into a token that you can exchange for dollars really isn't that much of a stretch. They now have a 'currency' of sorts where they get to use all the deposits for fractional reserve banking, keeping only 10% available at any one time. Money out into this token is basically free money to lend out, just as bank deposits are. The difference here is that the liquidity is higher, since they don't need to use it through the traditional banking system. I would expect it to have some traction with business and internationally.
- cremp 8y ago
  > use all the deposits for fractional reserve banking They already do, and it's supposed to be limited per law, it's called the leverage ratio.
  - BubRoss 8y ago
    Yes, that is the point I was making and why I pointed out that they only have to keep 10% on hand. Once the coin is connected to fractional reserve banking the same way deposits are, the path to monetization becomes much more clear.
- Nursie 8y ago
  It's more of an inter-bank settlement coin isn't it, than anything business oriented?
deleted 8y ago
[deleted]
hybridsole 8y ago
Why does JPM Coin need a distributed ledger if it will inevitably have identity requirements and central control by the bank itself? This is something like when CompuServe wanted to create their own version of the internet, and pretend it was still open. No thank you. Bitcoin is both open, distributed, and has a non-inflationary gold-like token as its underlying currency.
- gervase 8y ago
  The way I see it, most existing financial transactions are trust-based. Many cryptocurrencies aim to be trustless. I see this as a compromise, with the visibility and implementability of cryptocurrencies, while still being trust-backed. This way, if there is a problem with a transaction, or the currency, etc. there is someone left holding the bag, which is a better fit with the existing legal infrastructures that are already in place. I'm actually pretty surprised that this is coming from a corporation, and not a national government. SWIFT can be an absolute bear, and providing a programmable currency interface à la Stripe, but with lower fees and the full backing of a government could be a killer app for international trade facilitation.
  - nwah1 8y ago
    One of the main benefits of trust is to be able to rollback transactions. A warm fuzzy feeling of trust is not what is needed. This provides the fuzzy feeling without any tangible benefit, and all the of the downsides of trustlessness.
  - duxup 8y ago
    You raise an interesting idea. One of the issues with concurrency is the assumption that the transaction is between two non trusting parties (obviously it doesn't have to be that way). Most business don't want to / don't do business if they don't trust each other... and if they do trust then there are other ways to do business. Not sure if this JPM coin addresses that exactly, but it is kind of interesting.
  - bduerst 8y ago
    That just makes it redundant though, right? A trustless coin from a trusted vendor isn't going to be used because it's trustless, and it's introducing extra complexity. Also, any international benefit is just temporary arbitrage. The increased costs associated with international transactions comes from the high risk, which will inevitably catch up to any system that becomes popular.
jasode 8y ago
If one views blockchain money in the distributed spirit of Bitcoin, the idea of a "private cryptocurrency" will seem like an oxymoron. If it's a private blockchain JPM controls, JPM might as well run a traditional database. Yes, I agree. But setting that aside, here's my best guess at what JPM is trying to do: Maybe it's not the blockchain as storage that matters but the programming API that their institutional customers can use for transferring money between accounts. Maybe instead of thinking of JPM's blockchain as a broken version of Bitcoin's ideals for public money creation, JPM's main use is to let the big customers move money on their own -- using a forked version of Ethereum (called Quorum). Some of JPM's code examples on github.[0] There are pre-existing places where JPM customers can move financial instruments. Their dark pool exchange called JPMX is one example.[1] JPM's customers can trade stocks there outside of NASDAQ/NYSE. But what about cash instead of stocks? I think that's what JPMCoin tries to be. Yes, their's already the SWIFT network[2] for wire transfers but I don't think banks want to expose that to account holders to the same flexible degree that the Quorum programming language would allow. So, JP Morgan wants to enable their customers to instantly transfer money with their other customers without the legacy of SWIFT messages. For obvious reasons, they won't use the PayPal API, or the Stripe API. Instead, they use a flavor of the Ethereum API to let their customers execute "programmable money". The real Ethereum is too volatile for business-to-business money transfers. But with JP Morgan's financial backing to reliably convert JPMCoin to $USD, that would instill confidence for account holders to use it. In my opinion, JPMCoin isn't that revolutionary since it's only intended for their big institutional customers. Time will tell if their customers will adopt it or ignore it. [0] https://github.com/jpmorganchase/quorum-examples/tree/master/examples/7nodes/samples/simple-event https://github.com/jpmorganchase/quorum-examples/tree/master... [1] https://en.wikipedia.org/wiki/Dark_pool#Broker-dealer-owned_dark_pools https://en.wikipedia.org/wiki/Dark_pool#Broker-dealer-owned_... [2] https://en.wikipedia.org/wiki/SWIFT_message_types https://en.wikipedia.org/wiki/SWIFT_message_types
- smokeyj 8y ago
  I'm confused what this offers over USDC. Banks can already issue USD backed tokens with this model. USDC is already being traded on several exchanges. I'm sure I'm missing something obvious.
helpme3 8y ago
This is terrifying. If this, and similar ideas, gain adoption, this will undoubtedly lead to the next financial crisis. From my understanding, JPMC wants to issue a new coin and make the market for that coin by buying the coin for $1. Then, they plan to use this coin for it's normal banking tasks, such as lending money, except they would use JPM Coins instead of dollars. By using this coin, they would be able to skirt their fractional reserve requirements. Of course, this coin only has value because of trust in JPMC. If this trust or breached, or if external economic events cause a large amount of JPM Coin to be sold, then this will effectively be a run on JPMC. Given JPMC's size and importance in the marketplace, the aftermath would not be pretty.
- yingw787 8y ago
  > skirt their fractional reserve requirements. ...wait you can just do that? Just declare a "thing" to equivalent but not identical by reference to a dollar and go around laws using dollars because you technically aren't using the dollar? Yeah that's terrifying.
  - elliekelly 8y ago
    > ...wait you can just do that? Just declare a "thing" to equivalent but not identical by reference to a dollar and go around laws using dollars because you technically aren't using the dollar? Yes, they're basically taking dollars out of demand deposit accounts and putting them into brokerage accounts. Demand deposit accounts are liquid, guaranteed with FDIC insurance, and the account holder is entitled to the funds at any time. JPM Coin is theoretically liquid and "guaranteed" by JPM in the form of a promise to purchase it for at least $1 (up until they can't of course) but from the article it seems the funds won't be immediately available to account holders: > Purchases and redemptions may not always be immediate, but once converted to JPMCoin, transfers should be quick and error-free. The benefit of JPM Coin for JPM is a quicker/cheaper way to facilitate transfers between and among their various legal entities while also reducing the bank entity's total deposits (which in turn reduces the bank's capital and reserve requirements). The benefit of JPM Coin for JPM customers on the other hand, is not immediately obvious to me.
currymj 8y ago
as media luminary Matt Levine has often pointed out, the blockchain doesn't solve a technological problem in cases like this, it solves a social and organizational problem. at a big bank, managing the process of modernizing or replacing legacy databases is a very low-status job. on the other hand, pioneering a new initiative with distributed ledger technology is much higher status.
- shepardrtc 8y ago
  > at a big bank, managing the process of modernizing or replacing legacy databases is a very low-status job Its also incredibly high-risk, so it generally doesn't happen. They'll keep ancient software running as long as they can until they need to switch over to something new. So, yes, you're right, they use separate, new initiatives with newer tech to essentially do "upgrades".
tyingq 8y ago
I really don't get the point of a blockchain in these situations where you start with a hard requirement for a central authority. What advantage does this offer over a normal database ledger, in this situation?
- sjg007 8y ago
  One idea is that it will provide faster transaction and settlement times. Basically JPMC is a bunch of individual companies that buy and sell with each other already. Each time they transact and transfer money everything has to be proofed and verified. Adding crypto would ensure this condition by default at the protocol level basically. And using the distributed open ledger, they can have some supervisor process checking the chain to understand where the money is going. If this is successful they could expand to outside partner companies etc..
  - bduerst 8y ago
    Is JPM really going to let everyone see every customer transaction on the open ledger? Are they really allowing third parties to mine blocks outside of their own servers? If not, this is just a database transaction with bells and whistles.
    - lucozade 8y ago
      > Is JPM really going to let everyone see every customer transaction on the open ledger? No > Are they really allowing third parties to mine blocks outside of their own servers? No > If not, this is just a database transaction with bells and whistles Bitcoin is just a database txn with bells and whistles. JPM are making use of the time ordering immutability aspects of "traditional" blockchain tech. They're using normal distributed consensus on that because they don't need to solve the Byzantine Generals problem. They also have split public and private portions of the txns. They don't distribute the latter. I doubt even the public parts are distributed to non-participating parties (except maybe regulators) but I haven't looked that hard at it. All seems reasonable to me. And sure one could build time ordered immutability with Paxos consensus on top of an Oracle DB but why would you? It's not a particularly relational problem and a chunk of it already exists in open source. Which is presumably why they built on top of go-ethereum.
johnnycab 8y ago
It seems rather farcical, after Jamie Dimon openly rubbishing cryptocurrency, we now have another stablecoin competing with Tether. https://cointelegraph.com/news/jamie-dimon-comments-on-bitcoin-yet-again-says-he-doesnt-give-a-sht-about-it https://cointelegraph.com/news/jamie-dimon-comments-on-bitco...
duxup 8y ago
JPM coin just seems like someone put some money into some blockchain / coin like projects at JPM and came up with this product as a way to have something to show for it. I'm not really sure if the resulting product is really the result of some big idea, or just an amalgam of things / ideas put together in a way JPM finds acceptable, even if to show something for their own work. This is a weird situation where I can't tell if this is just some wonky homognized or otherwise last ditch effort idea that isn't anything, or is super complex and really a big idea....
- ackbar03 8y ago
  Lol that's exactly my view as well. They hired some crypto whizkid a while back who didn't stay long and left, probably just tying up remains of their project just to have something to show for
  - duxup 8y ago
    I know there was talk of a lot of hiring in the financal sector of bitcon guys, talk of culture mismatches, and folks leaving.... makes you wonder.
- shepardrtc 8y ago
  JPMC hired Accenture last year to build out a blockchain solution using Quorum to compete with Ripple's various solutions. I believe this arose from that work, but I don't know for sure.
  - duxup 8y ago
    It would be interesting to know what was actually asked for them at those meetings ... and later meetings.
    - deleted 8y ago
      [deleted]
    - shepardrtc 8y ago
sidlls 8y ago
Other than the ceremony around the tech how is this much different from the practice of banks issuing their own notes that was the norm forever?
abakker 8y ago
I wrote this a while ago when this was first mentioned: “JP Morgan says that it is trialling crypto-currency and blockchain in order to speed up payment transfers, as well as reducing clients' counterparty and settlement risk, and decreasing capital requirements.” Is a pretty frightening thing to read. Specifically, the way that sentence reads, JP Morgan would be issuing coins to reduce capital requirements…which means either: The journalist is confused, and they are using blockchain to speed up payment speeds which reduces risk, and the lower risk is what reduces capital requirement. in essence, faster transactions and settlement allows lower leverage/short term borrowing and therefore a slightly reduced capital buffer. They are issuing the coin as a security, which means the coin is actually raising capital. And so the sentence should say it reduces other capital requirements. They are issue the coin as “corporate points” which are redeemable for money from JPM, but which others cannot actually treat like capital. I.e. If I end up with a bunch of JPM coins on my balance sheet, I would treat them as an non-interest-bearing debt instrument? Kind of? I guess it isn’t clear yet, but I presume that these will only be used over short settlement times to facilitate easy transfer but there will be some kind of real money settle up at some point? Holding someone else’s non-interest-bearing loan certificate doesn’t sound that attractive in the long term. But, presumably #1/3 are the likely options because #3 means no new capital is actually generated, and #1 means that it is really transaction speed arbitrage.
lifeisstillgood 8y ago
So, do I read this right? JPM issues a coin for every dollar it holds of client money - presumably to the client who has to have a wallet. Clients can then move that money to other JPM accounts using the blockchain transfers. As long as they somehow remove a coin from the chain when client walks out of the bank with it, then what we get is ... Bank Of America and Deutsche can issue BoACoin and DBCoin doing exactly the same thing, and then those coins, all being worth $1 and on the (an) blockchain can be transferred between BoA and JPM. So we get trusted third parties asserting that a coin is actually real fiat money, and then actual workable cryptocurrency. It seems ... credible. My concerns are what ensures that BoA and JPM dont issue coins for the same dollar (ie how does JPM revoke a coin) I would be interested in any feedback - if I understand this right, it might be time to look into github for the python client wrappers again.
- weedking 8y ago
  The transition between chains will happen via blockchain middleware like Chainlink.
cwkoss 8y ago
This is just self-issued credit which can be transacted on the blockchain. That a mega-bank would want to issue credit in a novel way should not be surprising to anyone. This plan is essentially "digital IOUs with blockchain record-keeping". I'm not sure how they will entice consumers, but seems like a good play for JPM if they can get people using it.
buckthundaz 8y ago
Is it? Citi had started one in July 2015 [0] [0] https://blockmanity.com/news/citicoin-in-the-dump-as-citi-group-scraps-their-cryptocurrency/ https://blockmanity.com/news/citicoin-in-the-dump-as-citi-gr...
tantalor 8y ago
From the article: > JPM coin... are unsecured promises by a bank to give you dollars From JPM: > JPM coin... represent United States Dollars held in designated accounts at JPMorgan Chase So, is it secured by deposits or not?
- csomar 8y ago
  It's an unsecured deposit. lol.

101 points by adventured 8y ago

Mr. Robot really was a dramatized version of real life.

I'll put my money on an actual tech company coordinating with banks rather than a bank itself for the mere fact that a tech company most likely will know it better and attempt to do it more securely than outsource consultants to put it together for me. IBM's World Wire - https://www.youtube.com/watch?v=GtQY8Jfa4NA https://www.youtube.com/watch?v=GtQY8Jfa4NA Also full disclosure I have been buying a little bit of stellar here and there since it was less than 2 cents, before IBM even partnered with Stellar. Now IBM attempting to coordinate many banks worldwide to be able to transfer money seamlessly. I'm still waiting for the day we get payed per minute our salary and have to manage cash flows rather than balances.

solotronics 8y ago
I had a realization the other day when I rented a sports car on vacation. In the future you will just show up to a garage and scan QR code to view and accept contract for car rental. It would charge you by the minute so you can drop it off whenever you want. Also, if something came up and you wanted to leave the car somewhere else or switch cars, the cost to transport the car to another "share garage" would be easily calculated.
- Nursie 8y ago
  They have this with car clubs all over the place already.
- dmitriid 8y ago
  Car2Go, DriveNow, Sunfleet, countless others have existed for years with more-or-less literally that model.
Nursie 8y ago
> I'll put my money on an actual tech company coordinating with banks rather than a bank itself Banks basically are tech companies these days. I'd put JPMC's development capabilities over and above IBM's any day, and their domain knowledge much higher. (Disclaimer - I've worked for both, but obviously speak for neither)
- aphextim 8y ago
  I guess people can change, I just trust someone who went into the space willingly rather than doing it only after they realize there is money to be made and fear of being left behind. https://99bitcoins.com/jpmorgan-ceo-jamie-dimon-says-bitcoin-is-a-fraud/ https://99bitcoins.com/jpmorgan-ceo-jamie-dimon-says-bitcoin...
  - Nursie 8y ago
    I'm not asking you to trust that the intentions of either one. I wouldn't. IBM is a technology company that wishes it wasn't involved in technology any more. They want to be a business services company, and that's where they make a lot of their money. The tech side is old, mostly using out of date working practices, creating software slowly and (IMHO) badly. JPMC are a huge bank and will do anything that makes money. But OTOH - so what if he thinks BTC is a huge fraud? That doesn't stop them using a blockchain in a different way, does it?
qaq 8y ago
https://github.com/jpmorganchase https://github.com/jpmorganchase You are selling JPM short they have pretty good tech talent and a lot of resources and domain expertise.

BubRoss 8y ago

I actually thought this was always going to happen, I just didn't know which bank would do it first, and I'm surprised it is a bigger bank. Think about what a bank account is. You give up your money for a voucher and the bank keeps a ledger of all transactions. Turning it into a token that you can exchange for dollars really isn't that much of a stretch. They now have a 'currency' of sorts where they get to use all the deposits for fractional reserve banking, keeping only 10% available at any one time. Money out into this token is basically free money to lend out, just as bank deposits are. The difference here is that the liquidity is higher, since they don't need to use it through the traditional banking system. I would expect it to have some traction with business and internationally.

cremp 8y ago
> use all the deposits for fractional reserve banking They already do, and it's supposed to be limited per law, it's called the leverage ratio.
- BubRoss 8y ago
  Yes, that is the point I was making and why I pointed out that they only have to keep 10% on hand. Once the coin is connected to fractional reserve banking the same way deposits are, the path to monetization becomes much more clear.
Nursie 8y ago
It's more of an inter-bank settlement coin isn't it, than anything business oriented?

deleted 8y ago

[deleted]

hybridsole 8y ago

Why does JPM Coin need a distributed ledger if it will inevitably have identity requirements and central control by the bank itself? This is something like when CompuServe wanted to create their own version of the internet, and pretend it was still open. No thank you. Bitcoin is both open, distributed, and has a non-inflationary gold-like token as its underlying currency.

gervase 8y ago
The way I see it, most existing financial transactions are trust-based. Many cryptocurrencies aim to be trustless. I see this as a compromise, with the visibility and implementability of cryptocurrencies, while still being trust-backed. This way, if there is a problem with a transaction, or the currency, etc. there is someone left holding the bag, which is a better fit with the existing legal infrastructures that are already in place. I'm actually pretty surprised that this is coming from a corporation, and not a national government. SWIFT can be an absolute bear, and providing a programmable currency interface à la Stripe, but with lower fees and the full backing of a government could be a killer app for international trade facilitation.
- nwah1 8y ago
  One of the main benefits of trust is to be able to rollback transactions. A warm fuzzy feeling of trust is not what is needed. This provides the fuzzy feeling without any tangible benefit, and all the of the downsides of trustlessness.
- duxup 8y ago
  You raise an interesting idea. One of the issues with concurrency is the assumption that the transaction is between two non trusting parties (obviously it doesn't have to be that way). Most business don't want to / don't do business if they don't trust each other... and if they do trust then there are other ways to do business. Not sure if this JPM coin addresses that exactly, but it is kind of interesting.
- bduerst 8y ago
  That just makes it redundant though, right? A trustless coin from a trusted vendor isn't going to be used because it's trustless, and it's introducing extra complexity. Also, any international benefit is just temporary arbitrage. The increased costs associated with international transactions comes from the high risk, which will inevitably catch up to any system that becomes popular.

jasode 8y ago

If one views blockchain money in the distributed spirit of Bitcoin, the idea of a "private cryptocurrency" will seem like an oxymoron. If it's a private blockchain JPM controls, JPM might as well run a traditional database. Yes, I agree. But setting that aside, here's my best guess at what JPM is trying to do: Maybe it's not the blockchain as storage that matters but the programming API that their institutional customers can use for transferring money between accounts. Maybe instead of thinking of JPM's blockchain as a broken version of Bitcoin's ideals for public money creation, JPM's main use is to let the big customers move money on their own -- using a forked version of Ethereum (called Quorum). Some of JPM's code examples on github.[0] There are pre-existing places where JPM customers can move financial instruments. Their dark pool exchange called JPMX is one example.[1] JPM's customers can trade stocks there outside of NASDAQ/NYSE. But what about cash instead of stocks? I think that's what JPMCoin tries to be. Yes, their's already the SWIFT network[2] for wire transfers but I don't think banks want to expose that to account holders to the same flexible degree that the Quorum programming language would allow. So, JP Morgan wants to enable their customers to instantly transfer money with their other customers without the legacy of SWIFT messages. For obvious reasons, they won't use the PayPal API, or the Stripe API. Instead, they use a flavor of the Ethereum API to let their customers execute "programmable money". The real Ethereum is too volatile for business-to-business money transfers. But with JP Morgan's financial backing to reliably convert JPMCoin to $USD, that would instill confidence for account holders to use it. In my opinion, JPMCoin isn't that revolutionary since it's only intended for their big institutional customers. Time will tell if their customers will adopt it or ignore it. [0] https://github.com/jpmorganchase/quorum-examples/tree/master/examples/7nodes/samples/simple-event https://github.com/jpmorganchase/quorum-examples/tree/master... [1] https://en.wikipedia.org/wiki/Dark_pool#Broker-dealer-owned_dark_pools https://en.wikipedia.org/wiki/Dark_pool#Broker-dealer-owned_... [2] https://en.wikipedia.org/wiki/SWIFT_message_types https://en.wikipedia.org/wiki/SWIFT_message_types

smokeyj 8y ago
I'm confused what this offers over USDC. Banks can already issue USD backed tokens with this model. USDC is already being traded on several exchanges. I'm sure I'm missing something obvious.

helpme3 8y ago

This is terrifying. If this, and similar ideas, gain adoption, this will undoubtedly lead to the next financial crisis. From my understanding, JPMC wants to issue a new coin and make the market for that coin by buying the coin for $1. Then, they plan to use this coin for it's normal banking tasks, such as lending money, except they would use JPM Coins instead of dollars. By using this coin, they would be able to skirt their fractional reserve requirements. Of course, this coin only has value because of trust in JPMC. If this trust or breached, or if external economic events cause a large amount of JPM Coin to be sold, then this will effectively be a run on JPMC. Given JPMC's size and importance in the marketplace, the aftermath would not be pretty.

yingw787 8y ago
> skirt their fractional reserve requirements. ...wait you can just do that? Just declare a "thing" to equivalent but not identical by reference to a dollar and go around laws using dollars because you technically aren't using the dollar? Yeah that's terrifying.
- elliekelly 8y ago
  > ...wait you can just do that? Just declare a "thing" to equivalent but not identical by reference to a dollar and go around laws using dollars because you technically aren't using the dollar? Yes, they're basically taking dollars out of demand deposit accounts and putting them into brokerage accounts. Demand deposit accounts are liquid, guaranteed with FDIC insurance, and the account holder is entitled to the funds at any time. JPM Coin is theoretically liquid and "guaranteed" by JPM in the form of a promise to purchase it for at least $1 (up until they can't of course) but from the article it seems the funds won't be immediately available to account holders: > Purchases and redemptions may not always be immediate, but once converted to JPMCoin, transfers should be quick and error-free. The benefit of JPM Coin for JPM is a quicker/cheaper way to facilitate transfers between and among their various legal entities while also reducing the bank entity's total deposits (which in turn reduces the bank's capital and reserve requirements). The benefit of JPM Coin for JPM customers on the other hand, is not immediately obvious to me.

currymj 8y ago

as media luminary Matt Levine has often pointed out, the blockchain doesn't solve a technological problem in cases like this, it solves a social and organizational problem. at a big bank, managing the process of modernizing or replacing legacy databases is a very low-status job. on the other hand, pioneering a new initiative with distributed ledger technology is much higher status.

shepardrtc 8y ago
> at a big bank, managing the process of modernizing or replacing legacy databases is a very low-status job Its also incredibly high-risk, so it generally doesn't happen. They'll keep ancient software running as long as they can until they need to switch over to something new. So, yes, you're right, they use separate, new initiatives with newer tech to essentially do "upgrades".

tyingq 8y ago

I really don't get the point of a blockchain in these situations where you start with a hard requirement for a central authority. What advantage does this offer over a normal database ledger, in this situation?

sjg007 8y ago
One idea is that it will provide faster transaction and settlement times. Basically JPMC is a bunch of individual companies that buy and sell with each other already. Each time they transact and transfer money everything has to be proofed and verified. Adding crypto would ensure this condition by default at the protocol level basically. And using the distributed open ledger, they can have some supervisor process checking the chain to understand where the money is going. If this is successful they could expand to outside partner companies etc..
- bduerst 8y ago
  Is JPM really going to let everyone see every customer transaction on the open ledger? Are they really allowing third parties to mine blocks outside of their own servers? If not, this is just a database transaction with bells and whistles.
  - lucozade 8y ago
    > Is JPM really going to let everyone see every customer transaction on the open ledger? No > Are they really allowing third parties to mine blocks outside of their own servers? No > If not, this is just a database transaction with bells and whistles Bitcoin is just a database txn with bells and whistles. JPM are making use of the time ordering immutability aspects of "traditional" blockchain tech. They're using normal distributed consensus on that because they don't need to solve the Byzantine Generals problem. They also have split public and private portions of the txns. They don't distribute the latter. I doubt even the public parts are distributed to non-participating parties (except maybe regulators) but I haven't looked that hard at it. All seems reasonable to me. And sure one could build time ordered immutability with Paxos consensus on top of an Oracle DB but why would you? It's not a particularly relational problem and a chunk of it already exists in open source. Which is presumably why they built on top of go-ethereum.

johnnycab 8y ago

It seems rather farcical, after Jamie Dimon openly rubbishing cryptocurrency, we now have another stablecoin competing with Tether. https://cointelegraph.com/news/jamie-dimon-comments-on-bitcoin-yet-again-says-he-doesnt-give-a-sht-about-it https://cointelegraph.com/news/jamie-dimon-comments-on-bitco...

duxup 8y ago

JPM coin just seems like someone put some money into some blockchain / coin like projects at JPM and came up with this product as a way to have something to show for it. I'm not really sure if the resulting product is really the result of some big idea, or just an amalgam of things / ideas put together in a way JPM finds acceptable, even if to show something for their own work. This is a weird situation where I can't tell if this is just some wonky homognized or otherwise last ditch effort idea that isn't anything, or is super complex and really a big idea....

ackbar03 8y ago
Lol that's exactly my view as well. They hired some crypto whizkid a while back who didn't stay long and left, probably just tying up remains of their project just to have something to show for
- duxup 8y ago
  I know there was talk of a lot of hiring in the financal sector of bitcon guys, talk of culture mismatches, and folks leaving.... makes you wonder.
shepardrtc 8y ago
JPMC hired Accenture last year to build out a blockchain solution using Quorum to compete with Ripple's various solutions. I believe this arose from that work, but I don't know for sure.
- duxup 8y ago
  It would be interesting to know what was actually asked for them at those meetings ... and later meetings.
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  - shepardrtc 8y ago

sidlls 8y ago

Other than the ceremony around the tech how is this much different from the practice of banks issuing their own notes that was the norm forever?

abakker 8y ago

I wrote this a while ago when this was first mentioned: “JP Morgan says that it is trialling crypto-currency and blockchain in order to speed up payment transfers, as well as reducing clients' counterparty and settlement risk, and decreasing capital requirements.” Is a pretty frightening thing to read. Specifically, the way that sentence reads, JP Morgan would be issuing coins to reduce capital requirements…which means either: The journalist is confused, and they are using blockchain to speed up payment speeds which reduces risk, and the lower risk is what reduces capital requirement. in essence, faster transactions and settlement allows lower leverage/short term borrowing and therefore a slightly reduced capital buffer. They are issuing the coin as a security, which means the coin is actually raising capital. And so the sentence should say it reduces other capital requirements. They are issue the coin as “corporate points” which are redeemable for money from JPM, but which others cannot actually treat like capital. I.e. If I end up with a bunch of JPM coins on my balance sheet, I would treat them as an non-interest-bearing debt instrument? Kind of? I guess it isn’t clear yet, but I presume that these will only be used over short settlement times to facilitate easy transfer but there will be some kind of real money settle up at some point? Holding someone else’s non-interest-bearing loan certificate doesn’t sound that attractive in the long term. But, presumably #1/3 are the likely options because #3 means no new capital is actually generated, and #1 means that it is really transaction speed arbitrage.

lifeisstillgood 8y ago

So, do I read this right? JPM issues a coin for every dollar it holds of client money - presumably to the client who has to have a wallet. Clients can then move that money to other JPM accounts using the blockchain transfers. As long as they somehow remove a coin from the chain when client walks out of the bank with it, then what we get is ... Bank Of America and Deutsche can issue BoACoin and DBCoin doing exactly the same thing, and then those coins, all being worth $1 and on the (an) blockchain can be transferred between BoA and JPM. So we get trusted third parties asserting that a coin is actually real fiat money, and then actual workable cryptocurrency. It seems ... credible. My concerns are what ensures that BoA and JPM dont issue coins for the same dollar (ie how does JPM revoke a coin) I would be interested in any feedback - if I understand this right, it might be time to look into github for the python client wrappers again.

weedking 8y ago
The transition between chains will happen via blockchain middleware like Chainlink.

cwkoss 8y ago

This is just self-issued credit which can be transacted on the blockchain. That a mega-bank would want to issue credit in a novel way should not be surprising to anyone. This plan is essentially "digital IOUs with blockchain record-keeping". I'm not sure how they will entice consumers, but seems like a good play for JPM if they can get people using it.

buckthundaz 8y ago

Is it? Citi had started one in July 2015 [0] [0] https://blockmanity.com/news/citicoin-in-the-dump-as-citi-group-scraps-their-cryptocurrency/ https://blockmanity.com/news/citicoin-in-the-dump-as-citi-gr...

tantalor 8y ago

From the article: > JPM coin... are unsecured promises by a bank to give you dollars From JPM: > JPM coin... represent United States Dollars held in designated accounts at JPMorgan Chase So, is it secured by deposits or not?

csomar 8y ago
It's an unsecured deposit. lol.