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Just yesterday, the largest bank in the United States shocked the cryptocurrency and blockchain sector by announcing that it was working on launching its own cryptocurrency to make cross-border payments more efficient. The coin, known as "JPM Coin", will not be available to the public but will be used to settle the bank's internal wholesale payments worldwide, whose daily volume is estimated at $ 6 trillion. JPM Coin will also be indexed to the US dollar.
Brad Garlinghouse's response to the JPM coin
Ripple CEO Brad Garlinghouse went on Twitter to explain that JP Morgan had nothing to do with his new cryptocurrency project. He compared JPM Coin's closed network as a step in the wrong direction. His tweet can be found below.
As expected, banks are changing their tone on crypto. But this JPM project misses the point – introducing a closed network today is like launching AOL after Netscape's IPO. Two years later, bank coins are still not the solution https://t.co/39EAiSJwAz https://t.co/e7t7iz7h21
– Brad Garlinghouse (@bgarlinghouse) February 14, 2019
Bank coins are still not the solution
In the tweet, Mr. Garlinghouse referred to a 2016 article in which he explained that a coin issued by a bank can only be effective if it is used internally by the bank that issued it . In the article, he presented two scenarios on how the cryptocurrencies issued by banks would be adopted.
First scenario: all the world's banks put competitive and geopolitical differences aside, adopt the same digital badet, agree on its rules and harmoniously govern its use. Big luck.
Scenario Two (most likely scenario): Banks not belonging to the issuer group issue their own digital badets with their own sets of rules and governance.
Cryptocurrencies issued by banks would create a "mess"
According to Mr. Garlinghouse, the second scenario would create a situation in which the banking and monetary landscape would be more fragmented than it is today. It would be a mess.
The result would be an even more fragmented monetary landscape than we have today.
If banks from different digital badet groups want to settle transactions with each other, they will have to create markets between their unique digital badets or make transactions between their digital badets and a common fiat currency.
What a mess!
To conclude the 2016 article, Garlinghouse explained why the XRP is best suited for cross-border payments.
We strongly believe that banks need an independent digital badet to enable a truly effective settlement, and we believe that XRP is best positioned to play that role.
This brings us back to the fundamentals that make digital badets unique and special: they are universal currencies, which means that everyone can use them as units of value anywhere in the world.
This universality gives digital badets a global reach and a much faster settlement capacity than traditional badets.
What do you think about Brad Garlinghouse's comments that bank-issued cryptocurrencies are still not the answer? Do you think that the coins issued by the banks will create a more fragmented monetary landscape than today? Please let us know in the comment section below.
[Feature Image courtesy of Unsplash.com]Warning: This article is not meant to give financial advice. Any additional opinion in this document is purely that of the author and does not represent the opinion of Ethereum World News nor any of its other authors. Please do your own research before investing in one of the many available crypto-currencies. Thank you.
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