What is in a word? Last week we talked about how we still lack an agreed-upon definition for the term "decentralized." Next up: "cryptocurrency." JPMorgan Chase revealed yesterday that it will soon conduct limited real-world tests of a homegrown digital currency. The blockchain-based token, called JPM Coin, will be used to settle payments between the bank's big money clients, who will be able to redeem it for US dollars at a 1:1 rate.
Language police were quick to arrive on the scene, however. "If JPM Coin is a cryptocurrency, then Facebook credits and World of Warcraft money are cryptocurrencies," Jerry Brito of the blockchain-focused policy group Coin Center told Motherboard. The article's headline reads: "Don't call JPMorgan Chase's new JPM Coin a cryptocurrency." The Next Web agrees: "JPMorgan's new digital 'coin' is not a cryptocurrency, or even a stablecoin." (We haven't agreed on what a "stablecoin" is either, but let's put that aside for now.)
So why wouldn't it be a cryptocurrency? Simple: JPM Coin won't be issued on a public blockchain system like Bitcoin, Ethereum, and other things that we commonly call cryptocurrencies. Instead, it will be launched on a private blockchain that the bank developed itself, called Quorum. The computers that validate new transactions (in Bitcoin and similar systems, the "miners") must have permission to be part of the network. This centralized control runs directly counter to the ideology of decentralization that is so popular among cryptocurrency fans.
Let's be clear here, though: JPM Coin may not fulfil some people's criteria, but there's no doubt that it's a currency that runs on a cryptographic ledger. Doesn't that make it a cryptocurrency? In reality, the distinction that some are trying to draw here is as much a social and ideological one as it is a technical one.
In light of all this, one passage in particular stands out from an FAQ page on JPMorgan's website: "The JPM Coin will be issued on Quorum Blockchain and subsequently extended to other platforms. JPM Coin will be operable on all standard Blockchain networks." That's incredibly vague and may turn out to mean nothing. But it doesn't sound like something that would be possible with Facebook credits or World of Warcraft money.
(Also see: "Will people ditch cash for cryptocurrency? Japan is about to find out")
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