HomeNewsWhat JP Morgan thinks of Cryptocurrency Bitcoin and Ethereum
May 3, 2018
What JP Morgan thinks of Cryptocurrency Bitcoin and Ethereum
It’s hard to deny that within the last year cryptocurrency has become a mainstream investment. And when one considers its price increase, the numbers are staggering. According to Statista (https://www.statista.com/topics/2308/bitcoin/), Bitcoin experienced a price jump from $572.33 in August of 2016 to $4,764.97 August of 2017. But even with its massive success, it’s still interesting to consider what traditional banks must think of Bitcoin and other virtual investments like it. After all, one of the major appeals of this form of currency is that it enables investors to cut out the need for traditional banking channels altogether.
Perhaps none have been so vocal as global financial leader, J.P. Morgan. Over the course of the last few months, the bank has expressed a barrage of opinions ranging from disgust to seeing the potential that these currencies can offer. Let’s take a look at how its opinion about cryptocurrency has evolved over time.
J.P. Morgan Pokes Holes in Bitcoin
In October of 2017, CEO Jamie Dimon said that although he understood the value of the blockchain technology that went into making bitcoin and others like it, he did not understand how it could be of any value. And this is because it is a “non-fiat” digital coin, meaning that it has not been backed by a government. Sure, Dimon believed in the power of cryptocurrency, but he has expressed that blockchain technology would be implemented to move dollar currency, not Bitcoin or others like it.
In fact, Dimon has been so dead set against people buying into Bitcoin that he eluded that they lacked smarts, which drew lots of criticism from the general public. He was also quoted as later saying, “Who cares about bitcoin? The world economy is so big.” And he went on to further note that the bank moves about $6 trillion in money around the world each and every single day.
J.P. Morgan Perceives the Threat
However, in its latest annual report, JP Morgan acknowledges the possibility of cryptocurrencies like Ethereum and Bitcoin posing a serious threat to its services and causing financial loss for the company. This is a far cry from the statement made earlier by its CEO. In fact, the report released a list of details about the ways in which J.P. Morgan has had to change many of its practices so that it could accommodate the success of its new competitor.
The company is having to use new technologies in order to keep its customers. Amongst these changes are those made in payment processing as well as other services that deal with currency transfer as these are the areas that are most susceptible to technologies like cryptocurrency, which do not require inter-mediation. The bank feels that these currencies pose such a threat that it could affect prices and fees for their products and services and ultimately cause the bank to lose a great deal of its market share.
Though it is not entirely clear why the company suddenly decided to add cryptocurrency to its list of risk factors, what is clear is that the bank is exhibiting an ever-growing appreciation for how much of an effect blockchain technology will have on the financial industry. As a matter of fact, this financial leader is one of the first to spearhead the development of its own blockchain based on Ethereum.
J.P. Morgan Launches Its Own Cryptocurrency
The company recently announced its launch of a blockchain-based system. This system has been designed to “significantly reduce” the parties involved in verifying global payments, reducing the actual transaction times from a matter of weeks to just a few hours.This system is considered to be a spin-off of Ethereum and the company is considering the possibilities of turning it into an independent company called Quorum. To be fair, the company has been working on Quorum since 2016, but its hard to deny that this would be a great way to compete with cryptocurrencies.
J.P. Morgan Changes Its Mind
The company’s CEO was once quoted as saying that Bitcoin and other cryptocurrencies like it are a fraud. He has said that Bitcoin is only worth what the other guy is willing to pay for it. However, it wasn’t very long before the CEO expressed his regret about the remarks he made. In a later statement, Dimon says that his only concern was how this type of currency would be perceived by the government once it has reached its max potential.
J.P. Morgan May Help Customer Trade Bitcoin Futures
While this company may consider cryptocurrencies like Bitcoin to be a threat, this does not mean that they do not plan to profit from it. According to a report released by the Wall Street Journal in November of 2017 (https://www.wsj.com/articles/maybe-bitcoin-isnt-untouchable-at-j-p-morgan-after-all-1511289925), J.P. Morgan was considering facilitating client trades of bitcoin futures–specifically trading them on CME. This has further proven that cryptocurrency cannot be ignored. Profits from trading also need to be taxed.
So what does J.P. Morgan think about cryptocurrency? Well, the company originally expressed its doubts about cryptocurrency, going so far as to rebuke those who invested in it. And when it considered that Bitcoin’s market capitalization was less than $100 billion, it felt confident that it could outperform this type of cryptocurrency. However, as time goes by, J.P. Morgan has come to realize the threat that Bitcoin and other currencies like it could pose a serious threat to the company.
This is especially the case when it comes to its currency transfers and payment processing services. And perhaps this is why they have taken an, ” if you can’t beat them join them” stance. J.P. Morgan now thinks that cryptocurrency could revolutionize the way traditional banking is done and increase its appeal. Only time will tell how much this company will incorporate Bitcoin and other currencies like it into their daily operations. However, what we do know is that cryptocurrencies have become harder to ignore. And this mega company will do everything within its power to keep up with its new competition.