Ever since JPMorgan Chase announced the upcoming launch of the JPM Coin, there has been a lot of controversy about the nature of this new cryptocurrency. Many people in the industry have suggested that the JPM Coin is going to put Ripple and XRP out of business. This is because even if there isn’t enough information about the JPM Coin yet, the fact that it is meant to facilitate financial transactions like XRP has been disturbing. The question now is, will the JPM Coin make XRP obsolete?
XRP Vs JPM Coin: Is There A Competition?
The JPM Coin will be pegged to the USD. This means it would be a stablecoin. It would be used by financial institutions to facilitate transactions. While JPMorgan hasn’t released details of how exactly this would happen, it is going to be similar to how things work with Ripple’s xRapid and XRP.
XRP (XRP) Price Today – XRP / USD
| Name | Price | 24H % |
|---|---|---|
 | $0.00 | -0.80% |
Since inception, Ripple has made its goal clear: to reinvent the current cross-border financial system and take some of SWIFT’s market share. The xRapid protocol, which uses XRP as liquidity, has been the core of this project. The advantages of the xRapid protocol to banks are innovative. It speeds up payment settlements and reduces cost significantly for financial service providers and end users.
The JPM Coin is going to fill this role for its clients just like Ripple, however, major news outlet, Forbes, claims that the JPM Coin isn’t going to take over XRP. Forbes contributors claim that the JPM Coin isn’t like a traditional digital asset. While it is pegged to the USD, it is not open for trading, buying or selling in the wider market like the XRP token. In reality, it is neither a stablecoin or a cryptocurrency. So, it isn’t direct competition for XRP. The competition the JPM Coin presents is to Ripple, the FinTech firm, and not to its XRP technology. The problem is that pressure on Ripple can indirectly mean pressure on XRP.
Ripple, JPM Coin, And The Global Cross-border Payment Sector
The current standard for cross-border payment services is SWIFT. While SWIFT has dominated the market for many years, the network is flooded with inefficiencies. It is slow, expensive and unnecessarily strict. Rather than adopting Ripple’s protocol to attend to its cross-border payment needs, JPMorgan decided to go all out and develop its own blockchain based system. Since JPMorgan is one of the largest financial institutions in the world, it would not be a surprise to see other banks follow suit. These banks are Ripple’s target market and if they all decide to develop blockchain solutions, Ripple may lose market value.
XRP may be affected in two different ways. First, XRP is used as liquidity for xRapid. So, if xRapid is no longer needed, the demand for XRP may drop. Also, even if Ripple claims it doesn’t have central authority over the XRP token, it is still tied to it in one way. Many investors still tie the success of XRP to the success of Ripple. So, if Ripple starts losing ground, investors may begin a panic sell-off which would dramatically affect the price and market capitalization of XRP.
Do you think JPM Coin is going to put Ripple out of business or significantly affect the price and adoption of the XRP token? Share your comments below.
Max writes about blockchain projects and regulation with a special focus on United States and China. He joined Smarterum after years of writing for various media outlets.
