JPMorgan’s (NYSE:JPM) JPM Coin is being used live today by a “large international technology company that is using it for round-the-clock cross-border payments,” according to a report.
JPM Coin was revealed back in early 2019. More of a stablecoin, the digital currency is viewed as a path to speed up payments and reduce friction in the current transfers and payments ecosystem.
The blockchain endeavor is part of Onyx, a new business unit at JPMorgan that is designed to “continue to build cutting edge technology that delivers a better, faster, and more inclusive financial system.” Onyx has built a “production-grade, scalable, peer-to-peer blockchain-based network.” The JPM Coin seeks to make payments “instantaneous,” in contrast to the existing system where transfers may take several days and may suffer from errors.
In a report by CNBC, Takis Georgakopoulos, JPM’s global head of wholesale payments, explained the bank has been working behind the scenes until the JPM Coin was ready to scale:
“We’re talking about hundreds of millions of checks being sent. Using a version of blockchain with the participants being the main issuers of checks and the main operators of lockboxes, it’s possible we can save 75% of the total cost for the industry today, and make checks available in a matter of minutes as opposed to days,” he said.
Georgakopoulos said they are shifting from research and development to a real business – commercializing blockchain technology.
Transfers and payments is an enormous global business. JPM moves around $6 trillion a day, states the report. By shifting to a process that is real-time and costs mere pennies, JPMorgan may be well-positioned to maintain its standing in transfers and perhaps grow the business further.
JPMorgan is not the only entity looking to modernize the payments and transfer ecosystem. There are probably hundreds of companies attempting to do the same. But JPMorgan is the first traditional money center bank to announce it is using blockchain today and looking to scale it across its other partners.
Facebook’s Libra is an obvious comparison. The Libra Association, based in Switzerland, may have some competition from JPM if the bank decides to pursue retail. But Libra was initially conceived as a basket of currencies and other assets – something that may be deemed a security, and thus a target of regulators.
CBDCs or Central Bank Digital Currencies is another path for the digitization of value. Many central banks, including the US Fed Reserve and the European Central Bank, are reviewing CBDCs. China is already testing its digital RMB iteration live and in the wild.
Blockchain technology has gone through a period of excessive hubris followed by an inevitable retreat but, in the end, if the technology can provide a better service, at a lower cost, it simply makes sense. JPMorgan’s utilization of blockchain technology is another mile-marker in the odyssey to global acceptance and wide utilization.
Umar Farooq, CEO of Onyx, added that blockchain technology is currently “somewhere in the trough of disillusionment or just beyond that on the hype curve.” In brief, the development of blockchain is still very much in its infancy.