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If you ever read headlines from large, business focused news outlets, you've probably heard that JP Morgan Chase just created their own "cryptocurrency." But, referencing advice from the executive director of DC-based policy research and advocacy group Coin Center, Motherboard points out that JPM Coin isn't a cryptocurrency at all. As the Financial Times also notes, JPM Coin is more like a database managed by JP Morgan Chase than a publicly traded cryptocurrency. JPM's own site even has a chart that attempts to differentiate JPM Coin from cryptocurrencies and "stablecoins," and it mentions that the digital currency is designed for transferring large sums of money between institutions, not handling small transactions between individuals.
"If JPM Coin is a cryptocurrency, then Facebook credits and World of Warcraft money are cryptocurrencies," Jerry Brito, executive director of DC-based policy research and advocacy group Coin Center, told me over the phone. The sticking point is that most cryptocurrencies-like Bitcoin, Ethereum, or Monero-aim for decentralized control of the network, with many disparate computers working together to agree on the state of the shared ledger that keeps track of everybody's money (the blockchain). These networks are public in the sense that anybody can join in without asking for permission. And in the case of Bitcoin, more computers joining the network improves the system's overall security. JPM Coin, in contrast, runs on a "permissioned" blockchain called Quorum with limited participants that must first be approved by JP Morgan Chase. "It's the same distinction between AOL and the internet," Brito said. "The internet is open, so anybody who wants to create a blog, website, or consumer service can connect a server to the network without asking permission from anybody. Compare that to AOL-it was a permissioned network where if you were a publisher, you had to go to the company and seek their permission."
"If JPM Coin is a cryptocurrency, then Facebook credits and World of Warcraft money are cryptocurrencies," Jerry Brito, executive director of DC-based policy research and advocacy group Coin Center, told me over the phone. The sticking point is that most cryptocurrencies-like Bitcoin, Ethereum, or Monero-aim for decentralized control of the network, with many disparate computers working together to agree on the state of the shared ledger that keeps track of everybody's money (the blockchain). These networks are public in the sense that anybody can join in without asking for permission. And in the case of Bitcoin, more computers joining the network improves the system's overall security. JPM Coin, in contrast, runs on a "permissioned" blockchain called Quorum with limited participants that must first be approved by JP Morgan Chase. "It's the same distinction between AOL and the internet," Brito said. "The internet is open, so anybody who wants to create a blog, website, or consumer service can connect a server to the network without asking permission from anybody. Compare that to AOL-it was a permissioned network where if you were a publisher, you had to go to the company and seek their permission."