JP Morgan has made a stir announcing its new ‘cryptocurrency,’ JPM Coin. Some experts have already dubbed it as a Ripple killer, but is there any real substance to those claims?

JP Morgan created its own cryptocurrency to facilitate cross-border payments and allow to near-instant transaction processing.

Many industry experts, including Joe Weisenthal from Bloomberg TV, crypto influencer Whale Panda, and cryptocurrency analyst Max Keizer, were quick to dub it as the ‘XRP killer,’ because its value proposition seems awfully familiar to what Ripple has been touting with XRP for some time now.

However, let’s put aside our epitaphs for Ripple for the time being in order to figure out if the perceived threat is anything to worry about.

What Does XRP Do?

XRP is a cryptocurrency created by Ripple Labs, a San-Francisco startup. It is used within Ripple’s platform and designed to allow fast and cheap cross-border transactions. The platform is based on an open-source architecture and uses XRP to settle payments.

The declared purpose of the project is to keep money flowing freely by connecting different payment systems. Basically, Ripple aims to remove the restrictions of existing financial systems to make international transactions fast, reliable, and cheap for everybody.

XRP is publically available for anyone willing to buy it. It is not mineable and has a limited supply controlled by Ripple, which often makes it a target of criticism for being too centralized.

The company has a growing network of institutional payment providers that use Ripple technology to process transactions and send money globally.

What Does JPM Coin Do?

JPM Coin is a digital asset, created by JP Morgan Chase, one of the world’s largest financial institutions. It is supposed to be used by JP Morgan within its wholesale payments business to facilitate transactions between institutional clients for the bank.

The system is based on Quorum, an Ethereum-based distributed ledger developed by the bank. It is an open source software, meaning that other banks can use it to create their own blockchains.

The main purpose of the project is to renovate the bank’s payment business with blockchain-based technologies and make settling payments between clients faster and cheaper.

JPM Coin is available only to JP Morgan’s institutional clients, who receive the coin after they deposit fiat currency with the bank. The coin’s value is tied to the USD, which makes it less volatile and similar to the concept of a stable coin.

The bank has 80 percent of Fortune 500 companies as customers and handles the lion’s share of correspondent banking payment transactions.

Is There a Reason to Worry?

To sum it up, both Ripple’s XRP and JP Morgan’s JPM Coin are designed to make payment settlements between institutions faster and easier. However, this is a case of the devil being in the details.

First, JPM Coin is not public. You cannot purchase it unless you are one of JP Morgan’s institutional clients. According to Jerry Brito from Coin Center, this circumstance turns JPM Coin into a digital asset for in-house-built payments systems, which has nothing to do with the concept of a cryptocurrency.

“I see folks referring to it as a cryptocurrency. It’s not a cryptocurrency. A cryptocurrency is one that is open and permissionless, if you want to download it, you don’t need permission; you just need some software,” the expert explains.

Moreover, the bank did an excellent job of explaining that JPM Coin is not public, unlike cryptocurrencies, and not permissionless.

Basically, JP Morgan has ended up with a closed system —a road to nowhere in the world of decentralized solutions. Solutions which focus on removing barriers between various market participants and creating open systems for everyday people.

The problem of so-called bank coins and proprietary blockchains is very well summarized by an XRP supporter Crypto Dave, who pointed out to lack of trust between banks and other traditional financial institutions.

Bank are not inclined to help other banks to grow and earn a profit. Meanwhile, Ripple is not a bank, but a service and technology provider that can become a link which brings together all market participants into one system. In this respect, Ripple is more of a rival to SWIFT than to JP Morgan’s new initiative.

Market Turns a Deaf Ear

Notably, the birth of a Ripple killer should have triggered a massive exodus from XRP. However, nothing of the kind has happened yet. XRP has been relatively strong in a market-wide declining trend for over a year.

If people are so worried about the fate of Ripple, why are they not selling their coins? One possible answer to this mostly rhetorical question is that XRP holders simply do not believe the FUD.

Do you believe that the JPM Coin is a Ripple killer? Or will the two systems co-exist peacefully? Let us know what you think in the comments below!