There’s much excitement at the idea that JP Morgan has just become the first bank to launch a cryptocurrency – which isn’t quite what they’re doing. In reality they’re launching a new internal accounting method. Sure, we can say that that’s all money is anyway, just a measurement of who gets to command resources, but that’s being a bit more reductionist than most of us are when discussing the subject of loot.
JP Morgan’s version of Bitcoin won’t circulate outside the bank, you and I can’t get our hands on some, it’s a purely internal matter. Really, it’s a version of the blockchain – a ledger of which real money has moved where.
JP Morgan Chase has become the first leading American bank to launch a digital coin, providing a vote of confidence in the technology that underpins bitcoin and other cryptocurrencies. JPM coins, which have been assigned a fixed value of $1 each, will be used to send and receive money within the bank’s wholesale payments business, which moves about $6 trillion every day on behalf of banks, broker-dealers and other corporate clients. JP Morgan, valued at $340 billion, is the largest lender in the United States. JPM coins make use of the blockchain technology on which bitcoin and other digital or cryptocurrencies are based, but not the currencies themselves. They will not be available for public trading in the way that bitcoin is.
Mistakes do in fact happen when those large sums of money are moved around. There are people whose job is to untangle those messes. A permanent ledger of all movements – which is what the blockchain is – is a useful additional tool in doing so. And that’s pretty much it.
Much like the million pound note. Yes, there was a great movie about it – the plot centering on the fact that no one had change – but at least according to folk lore such really did exist. It was used internally at the Bank of England (some versions say Treasury) to track money being moved around between departments. Whoever had the note(s) had the money in their bit of the accounting system.
JP Morgan’s cryptocurrency is just like this, it’s an internal accounting measure, no more. The truly fun part of it is going to be when someone manages to hack it….