JP Morgan Chase and Co. announced Thursday it would be the first major institutional bank to release its own cryptocurrency. Its new JPM Coin is an almost shockingly impotent reaction to Bitcoin and other cryptocurrencies by the United States’ largest bank.
JP Morgan says you can now give them a dollar, and they’ll give you a JPM Coin, which you can redeem for your dollar with them any time.
So they’re using JPM Coin to keep track of how much money you’ve deposited and withdrawn. So they are offering basic banking as a new crypto.
The embarrassing level of fail in this move is difficult to overstate.
It would be shocking but for the fact that we already knew for years where institutional banking’s head is at regarding cryptocurrency, how it thinks about crypto, the knowledge about crypto that it represses, and what it wants the world to think about Bitcoin.
We know from such well-worn shibboleths as:
“We’re excited about blockchain the technology underlying Bitcoin.”
Which would be like horse-drawn carriage makers a hundred years ago saying they’re excited about some of the underlying technology of these new horseless carriages…
But not the horseless part.
And then presenting a new “automobile” to the market that looks a lot like a Model T carriage and copies some of its finer details, but it’s pulled by horses.
They call it “minting” a coin to mean buying a digital JPM Coin from them, and “redeeming” the coin means selling it back to them for your U.S. Dollar.
This is almost too ridiculous to criticize cogently.
To begin with, you’re not minting anything. That usage, in this case, is in the realm of 100% fluff metaphor. When bitcoin is put into your bitcoin wallet, the fact that it was transferred to your account is indelibly minted into those bits.
Once the transaction has cleared, it’s irreversible. It’s much more permanent and immutable than a design stamped into a metal blank with a coin die and press.
But all that’s happening with JPM Coin, a stablecoin pegged to the dollar at a 1 to 1 ratio, is a client gives JPM a dollar, and JPM’s computer remembers it gave them a dollar and that they’re obligated to give it back when the customer wants to withdraw it.
That is literally exactly how things were at JPM before this so-called cryptocurrency. Clients would give them their money, and they’d give it back when the clients asked for it.
That’s just called banking.
The only meaningful difference may be that they’ve worked up some solutions to manage transfers between accounts faster and can verify more quickly whether there are errors.
It’s 2019 and JP Morgan Chase and Co. is finally getting around to spending some of that TARP bailout money on computer software to improve its electronic record keeping.
And it has hilariously decided to pass that off as JPM Coin, a new “cryptocurrency” brought to you by Jamie Dimon, the guy who called bitcoin a fraud.
The response from the crypto community was fierce and hilarious, ranging from “nothing like Bitcoin” (MIT Technology review), to “isn’t even a real cryptocurrency” (CCN), to 2019’s most popular token for money laundering:
That tweet by Morgan Creek Capital partner Anthony Pompliano is no glib remark.
Although its billionaire CEO Jamie Dimon said “Bitcoin is a fraud” in Sept. 2017, his company has paid billions and billions of dollars in what are amazingly slap-on-the-wrist fines compared to the amount of money being manipulated by JP Morgan for nefarious purposes:
“Since 2010, the year Bitcoin first began to circulate, under the leadership of Jamie Dimon JP Morgan Chase has been charged with 48 different violations of banking and securities fraud. $28,675,456,874.00 is the total they’ve paid out just in the past 7 years in slap-on-the-wrist fines by politicians whose coffers they’ve filled with money.”
They should have just named it FraudCoin because, chances are, it will be used for that at some point.
This is also just a way for JP Morgan, which says its new bank token is designed for wholesale business-to-business financial settlement among its major clients, to inflate its reserves with new JPM bucks created out of thin air and tell its clients: “Here, give us your money for these tokens.” What’s the convertibility of JPM Coin to Schrute Bucks?
The idea behind a stablecoin is an exercise in futility.
Like contemplating one of those absurdist koans.
The coin is pegged to the value of something else.
So why not just hold the something else, which ostensibly will always have the same value as the stablecoin, but is actually itself and not just something redeemable for itself?
This is just so funny because Dimon and the likes of institutional finance scoffed at Bitcoin, comparing it to the Dutch Tulip Mania, arguing that it is merely a shared hallucination of one greater fool after another of some kind of value in something with no intrinsic value.
Now they’re asking big players with a lot of money to buy their stablecoin, which they say is worth $1, but why is it worth that? Stablecoins are only worth what all the people who share the hallucination agree it’s worth, but there’s no intrinsic value in JPM Coin.
JPM Coin is so absurd it’s almost like a post-modern art project.
JP Morgan just issued a digital certificate that you can redeem for another digital certificate that you haven’t been able to redeem for hard specie since Nixon was president.
Are we actually witnessing the banking system viciously satirize itself?
Forget World War 3, nuclear Armageddon, the zombie apocalypse, rising sea levels, the AI winter, gamma rays from outer space, or some kind of nano-biotic gray goo.
Is the real chthonic force that will overwhelm the world the unbearable hilarity and terrifying blindness of dinosaur legacy institutions fumbling through our brave new world?
Disclaimer: The views expressed in the article are solely those of the author and do not represent those of, nor should they be attributed to, CCN.
Jamie Dimon Image from AP Photo / Jacquelyn Martin
Last modified: June 14, 2020 11:10 AM UTC