On February 14, 2019, JP Morgan launched a stablecoin known as the JPM Coin. Based on the purpose and function of the cryptocurrency, it looks to be in direct competition with Ripple’s XRP. A number of industry stakeholders have been weighing in on what this move by JP Morgan would mean for Ripple.
Joe Weisenthal, co-host of “What Did You Miss?” on Bloomberg TV, known on Twitter for sometimes sharing his views on crypto-related matters, responded on what the JPM coin might mean for Ripple’s XRP.
Weisenthal began his argument with the premise of blockchain becoming a more effective way of moving money for banks. With that, he states it would be more reasonable for banks to use the JPM stablecoin than to use Ripple’s XRP. The suggestion that the XRP cryptocurrency might be obliterated is hinged on the fact that Ripple counts on regulated institutional customers.
The argument was further reinforced with the exchange rate volatility risk associated with using XRP as a bridge currency. He suggests that the fiat-backed JPM coin sounds to be far more appropriate for the customer-base Ripple is targeting.
The JPM coin can be viewed as a form of short-term credit that is moved instantly, while the underlying transaction goes through the settlement process. Then when the actual money goes through, the coins are destroyed, as they are replaced by the money. In this wise, the JPM coin may not be in direct competition with other cryptocurrencies, but might steal the entire target market of Ripple.
If it turns out that the Blockchain/Coin framework turns out to be a good one for banks transferring money around, then the JPM Coin should absolutely obliterate Ripple
— Joe Weisenthal (@TheStalwart) February 14, 2019
There have been varying responses to this notion. One of the major concerns is the fact that JP Morgan, which has expressed negative attitudes towards Bitcoin and blockchain in the past, seems to be leading the charge of the banks into blockchain. The CEO of JP Morgan has made notable remarks in the past about the blockchain trend, saying Bitcoin is a fraud at one point.
Some stakeholders in the crypto space have weighed in their opinion on the matter, questioning the purpose of the XRP coin going forward. Tushar Jain, a managing partner at Multicoin Capital, stated that banks would not allow Ripple Inc. to become enriched by using XRP for settlements. He went further to hint that other banks will produce their own form of coin like JP Morgan just did.
Banks were obviously never going to use XRP for settlements and enrich Ripple Inc (who owns more than half of all XRP). They would rather enrich themselves instead!
Kudos to JPM for being first. They are going to wipe the floor with Ripple. https://t.co/Jkfkvr7BnE
— Tushar Jain (@TusharJain_) February 14, 2019
While this development brings institutional legitimacy to the blockchain industry, it remains to be seen how cryptocurrencies like Ripple’s XRP will navigate this new trend and stay relevant.