Bloomberg Editor Says JPMorgan’s Cryptocurrency Will ‘Obliterate’ Ripple; is XRP in Trouble?

On February 14, JPMorgan, the $340 billion banking giant, launched a stablecoin called JPM Coin. Industry experts foresee the stablecoin thrashing Ripple and its cryptocurrency XRP in the long run.

Joe Weisenthal, co-host of Bloomberg’s What’d You Miss? 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.”

Executives at major cryptocurrency investment firms such as Multicoin Capital raised a similar issue for XRP.

Could the Price of Ripple (XRP) Decline Due to JPMorgan’s Crypto?

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.

RippleNet and XRP serve as the main tools on the Ripple blockchain network that enable financial institutions to clear transactions using the blockchain.

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.

Ripple, the company, has been focused on establishing partnerships with both banks and fintech service providers throughout the past several years, primarily to improve the liquidity of the network.

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.

Speaking to CNBC, Umar Farooq, JPMorgan blockchain projects head, said that JPM Coin will have three core use cases and the primary use case is international payments for corporations.

“The first is for international payments for large corporate clients, which now typically happens using wire transfers between financial institutions on decades-old networks like Swift,” CNBC reported.

The problem is, that is exactly what Ripple was built for and the company has the same vision as JPM Coin: to overtake SWIFT and establish a global blockchain network for financial institutions.

In November 2018, Ripple CEO Brad Garlinghouse said in an interview with Bloomberg:

“The technologies that banks use today that Swift developed decades ago really hasn’t evolved or kept up with the market. Swift said not that long ago they didn’t see blockchain as a solution to correspondent banking. We’ve got well over 100 of their customers saying they disagree.

Essentially, JPM Coin and Ripple have the same use case, are targeting the same market, and are both aiming to overtake the SWIFT network.

Tushar Jain, a general partner at Multicoin Capital, said JPMorgan will “wipe the floor with Ripple,” emphasizing that banks would rather use a technology developed by banks rather than a company outside of the traditional financial sector.

XRP in Trouble?

In the past three months, the price of XRP has fallen from $0.565 to $0.298, by more than 47 percent.

The decline in the XRP was accelerated by the inability of the cryptocurrency market to maintain the momentum created in the last quarter last year.

But, in comparison to other well-performing cryptocurrencies such as Binance Coin and Bitcoin, XRP has underperformed.

It remains to be seen whether the increasing competition in the blockchain sector and cross-border transactions market will directly lead toward a decline in the price of XRP.

The concerns in the long-term growth of XRP are in the challenging environment Ripple is in following the release of JPM Coin to secure banking partners.

Click here for a real-time Ripple price chart.

Featured Image from Shutterstock. Price Charts from TradingView.

Author: Joseph Young 
Image Credit: Source: Shutterstock

JPMorgan Bank is Set to Develop its Own Cryptocurrency—JPM Coin

JPMorgan is making moves targeted at cementing its stance as a force to reckon with in the emerging digital asset market. The financial institution has recently made it known that it has plans to launch its own cryptocurrency — JPM Coin. Although, still an agenda for the future, it will be a major milestone in the bank’s plan for a worldwide crypto dominance.

JPMorgan has Plans For In-House  Development

The coin is going to get worked on by engineers in the bank and its development won’t be outsourced. According to a recent report announcing the intention of the bank to develops the coin, it was stated that the coin development is moving to real world trials in “a few months”.

The announcement also made it known that the bank intends on using JPM Coin to “settle some portion of its transactions between clients of its wholesale payments business in real time”

Currently, the bank moves more than $6 trillion daily as part of its business, in light of this, even a small portion of this will significantly increase the overall capitalisation of the crypto market.

Proposed Uses of the JPM coin

In a recent statement Umar Farooq, JPMorgan’s blockchain lead, has noted three of the likely uses of the JPM coin. Farooq stated that the bank token can be used for “replacing wire transfers for international payments by large corporate clients and cutting settlement times from days to just moments. It could also be used to provide instant settlement for securities issuances, as well as to replace U.S. dollars at held internationally by subsidiaries of major corporations using JPMorgan’s treasury services.” Farooq continued that: “Is there a way to ensure that a subsidiary can represent cash on the balance sheet without having to actually wire it to the unit? That way, they can consolidate their money and probably get better rates for it.”“Pretty much every big corporation is our client, and most of the major banks in the world are, too,” he concluded.

Author: Joshua Tayo
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JPMorgan Takes Another Shot at Bitcoin, Claims Mining Isn’t Worth the Value of the Cryptocurrency

By A report by JPMorgan suggests that for over four weeks during the fourth quarter, bitcoin’s market price was lower than its mining costs on average.

According to the JPMorgan analysts, the cost of mining bitcoin during Q4 was averaging about $4,060 around the world, Bloomberg reports. According to them, starting late November when the price of bitcoin went below $4,000, it became uneconomical to mine bitcoin.

Bitcoin Price Still Below the Globe’s Average Cost of Mining

Currently, bitcoin is trading at around the $3,650 level after falling off the $3,700 resistance level which it touched earlier.

Bitcoin Price. Source: TradingView

Chinese miners were the exception though as they incurred lower mining costs. On average Chinese miners spent approximately $2,400 to mine one bitcoin:

“The drop in Bitcoin prices from around $6,500 throughout much of October to below $4,000 now has increasingly pushed margins further and further negative for just about every region except low-cost Chinese miners.”

Bitcoin miners in the world’s second-largest economy achieved this by directly buying electricity from power generators with excess production. Some of these power generators include aluminum smelters.

Additionally, the analysts have estimated that bitcoin’s marginal mining cost would go below $1,260 if only Chinese miners remained.

Bitcoin Miners Expected to Exit, Lowering the Hash Rate

Per the JPMorgan Chase analysts, the miners whose expenses exceed the cost of bitcoin are expected to exit the space. Such capitulation would benefit the remaining miners as it would lower the hash rate (computing power required to mine bitcoin). Once the hash rate goes down the remaining miners will be able to mine more bitcoins without raising energy consumption.

This level of capitulation is yet to happen though according to the analysts. However, the number of miners based in low-cost regions such as the Czech Republic, Iceland and the U.S. has grown.

Earlier this week, JPMorgan also released another report indicating that bitcoin’s price could crash below $2,000 if bearish conditions persist. Specifically, JPMorgan analysts expect bitcoin’s price to fall to as low as $1,260 if the bear market doesn’t go away.

Bitcoin’s not the Digital Gold Anymore?

At the same time, the analysts said that bitcoin didn’t have any real value. The analysts argued that bitcoin would only make sense if investor’s faith in gold and the U.S. dollar was eroded:

“Even in extreme scenarios such as a recession or financial crises, there are more liquid and less-complicated instruments for transacting, investing and hedging.”

In December, JPMorgan also issued a research note which indicated that the crypto bear market was turning off institutional investors.

At the time, JPMorgan’s global market strategist Nikolaos Panigirtzoglou said that interest in bitcoin futures was declining with the fall in cryptocurrency trading volumes.

Author: Mark Emem 
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