Backed by the US Dollar, the JPM Coin has been garnering a lot of attention since its inception earlier this year. Binance Research’s suggestion that JPM Coin will merely have a “minimal impact” has tacitly clarified all doubts that the members of the cryptocurrency community had regarding the magnitude of the new JPM Coin’s effect on the future of XRP and Stablecoin market. The research department of Binance, one of the most eminent cryptocurrency exchanges, conducted an in-depth analysis by comparing the BankCoin (a popular term for JPM Coin) with the stablecoin market and XRP, both of which are backed by the fiat currency.
Is this Binance report necessary?
Of course! It can be said that the report by Binance Research has just averted a big resistance against the crypto newbie. JP Morgan’s cryptocurrency floats on a private blockchain. The banking giant has been working on use cases like Quorum (the private and permissioned blockchain technology) which has been developed in partnership with an Ethereum startup, called EthLab. Stablecoins have a crucial role in tackling the issue of volatility of the cryptocurrency market since Tether, the most prominent of all stablecoins, was introduced in the year 2014. The diverse nature noticed in the emergence of stablecoins has led the Binance Research wing’s report to describe JPM Coin in the following manner —
JPM Coin represents the first prototype of a stablecoin created by a traditional financial institution.
Moreover, the analysis views the BankCoin as a “precursor of a third generation of stablecoins…” because it is being facilitated on a private blockchain (belonging to a financial institution) for purposes related to settlements. Since the current business model of the stablecoin market will be transformed from an instrument of hedging to one that addresses business problems, Binance Research states that the JPM coin would certainly be capable of assisting client transactions and settlement functions in the best way possible.
So, the JPM Coin and other similar bank-issued-cryptocurrencies will basically cater to the needs of investors hailing from various financial institutions; hence Binance’s assurance regarding JPM Coin’s “minimal impact” on the stablecoins on a public domain. As the report reads —
Large banks and financial institutions such as J.P. Morgan have a distinct set of advantages in issuing fiat-collateralized stablecoins, but these offerings will not displace liquid, publicly traded stablecoins in the near-term given their closed ecosystems built on private blockchains.
What about Ripple (XRP)?
The Research Wing’s report depicts XRP as the “mediator currency” functioning among cryptocurrencies, fiat, as well as trust products such as commodities, miles and so on. XRP is capable of interacting with networks on a closed blockchain, just like the JPM Coin, so that it can bridge the gap existing between the ones which are open and the other closed networks. This is evident in the concluding words of the Binance report —
While there is currently no direct overlap on the functionality of the two initiatives, future developments on the reach of JPM Coin outside of its existing closed network will determine to what degree Ripple and JPM Coin will compete.
However, it would be an understatement to assume that JPM Coin will only be applicable amongst JP Morgan’s own clientele. Jamie Dimon, CEO, JP Morgan Chase, had announced recently that the JPM Coin will be instrumental in conducting retail payments too. So, the days of complete digitised payments are not that far, it seems!