Joe Wiesenthal, an editor at Bloomberg has spoken out about JP Morgan’s Valentine’s Day announcement about the launch of its JPM Coin, a stablecoin that it will use to facilitate payment transactions.
The Bloomberg editor said: “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.
Think about it, let’s say you were in the business of transferring money, why would you take on the exchange rate volatility risk associated with having Ripple as a bridge currency, when you could have a fiat-coin backed by JPMorgan. No brainer.”
Wiesenthal isn’t alone in thinking like this: executives at major cryptocurrency investment firms also believe that the arrival of JPM Coin could bring trouble for XRP.
As CCN says, “The concerns of industry executives and experts on the long-term growth trend of XRP is that if JPMorgan uses JPM Coin to settle payments between its clients, as the bank said, it will put XRP in direct competition with JPM Coin.”
The Ripple blockchain network is a payment infrastructure for cross-border transactions which banks and financial institutions can utilize to send and receive payments with low costs and faster clearing time. But, the value of any settlement network comes from its liquidity and on a banking network, the liquidity comes from the number of banks that exist on the network. Hence the challenge facing Ripple and its XRP token, because JP Morgan is by far the bigger player in banking and finance.
It’s JPM versus XRP
JP Morgan plans to use the JPM Coin for “international payments for large corporate clients, which now typically happens using wire transfers between financial institutions on decades-old networks like Swift.”
That is exactly what XRP and Ripple’s other platform products, like xRapid, have been designed to do. Plus, Ripple wants to overtake SWIFT, but now JP Morgan wants to do the same.
Tushar Jain, a general partner at Multicoin Capital, said JPMorgan will “wipe the floor with Ripple,” stressing the fact that banks would rather use a technology developed by a bank rather than a company outside of the traditional financial sector, such as a fintech like Ripple. Old habits die hard, one might easily say here.
Can Ripple take on JP Morgan? It’s a tough challenge for them but the fintech market is still evolving and there may be ways to save Ripple’s products, even if the banking dinosaurs prefer to only do business with their own kind.