Settling the skepticism over JPM Coin by Prasoon Mukherjee

Recently, the financial services industry has witnessed an overdose of journalism surrounding JP Morgan's first (big) entry into the crypto-coin space, most of it is focused around questions related to Jamie Dimon's previous critical views about "Bitcoin" when he had said - "You can’t have a business where people can invent a currency out of thin air and think that people who are buying it are really smart. It's worse than tulip bulbs".

The debate over Dimon's earlier comment on "Bitcoin" in the context of JPs recent announcement of JPM-Coin is completely uncalled for and reflects media's general lack of awareness about the fact that "Bitcoin" as a use case over blockchain, is a completely different subject when compared to "Blockchain" as a framework that may have much wider application in most industries.

If Jamie Dimon was to be asked today, he may still respond with equal scientism (right or wrong is not the point) on Bitcoin as an alternate permission-less currency but it doesn't mean that banks have not been investing in the technology to build alternate use cases. Most of media does not understand that JP has not built an alternate to Bitcoin with JPM Coin.

PM-Coin (to be branded as ‘stablecoin’), is a token linked to USD that will be transacted over JPs permissioned DLT framework, enabling clients to send money to one and other through blockchain. The framework will allow the tokens (as coins) to get transferred instantaneously, and subsequently redeemed for the equivalent amount of U.S. dollars, thereby reducing the typical settlement time and inefficiencies in the system.

The phrase "coin" - as a token (in this case) should not be misunderstood with "coin as in currency", therefore, it must also be understood that the value of this token (within the permissioned DLT) will be fixed to a dollar, because the purpose it solves is bringing efficiency to settlements. Emphasising that the objective is not to let JP-Coin trade in open market in a permission-less ecosystem where the market demand and supply would determine the coins price vis-a-vis any other currency.

In summary - let us all learn a little more about this fantastic framework that has much wider application across many industries than we think, and not be simply critical about a person's or an organisation's strategic interest in building more reusable platforms towards tackling higher order problems which have so far not been solved by traditional means. Quite like the Italian inter-bank reconciliation system that is being completely rewritten using the same combination of technology and concepts under the project name "Spunta",  which is built of r3-Corda , the corner stones of which were laid by some of the large banks of which JP was one, till it parted from the consortium in mid 2017 to pursue a very distinct technology path which was thought to be at odds with the one chosen by the r3 at that time. As "Spunta" goes into pre-production this year with the complete Italian banking reconciliation system to be tested, with hundreds of millions of transactions inside the platform, it's just a matter of time until we see more consortiums coming together within the banking networks to successfully deliver concepts surrounding DLT.

The industry will not be surprised if JP-Coin is made scalable enough and, in only a matter of time, published outside as an open source platform so that it becomes another reconciliation plus settlement system across banks, as long as there is value seen in its scalability. This would highlight everything right about healthy competition within this space.

A message to all skeptics in this area - "hold our thoughts or give it any name but tokens and smart contracts are in". "Innovators" have done their job, "Early Adapters" like this one are taking it to the next stage. Now it's a matter of choice for the skeptics to either get on to the bandwagon or fall in the category of "late majority" + "laggards”.

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Prasoon Mukherjee has more 20 years of combined experience in IT Consulting and Capital Market operations having worked as a thought leader and domain specialist in multiple streams of IT functions that includes Portfolio Accounting, Mutual Fund Analytics, Securities Lending & Borrowing, Custodial Operations, Corporate Actions Processing and others areas of Capital Markets.

Currently, he is employed with a French Bank, leading the Fund Services and Custody Operations Unit in delivery and IT strategy. By virtue of having been in the industry for close to 19 years, during a time when the financial sector is continuously witnessing disruptive changes in the electronic segment, with the introduction of complex trading instruments, shortening of settlement cycles, host of regulatory changes and how they hook up with multi-channel online applications, he has led many of these engagements successfully into production. He has gained extensive International exposure having executed, delivered and managed strategic projects in various capacities across large banks and financial institutions in North America, Europe & APAC.

Besides, Prasoon loves nurturing his interests in writing and sharing acquired wisdom on disruptions in the field of finance, technology, economics, politics and how they impact the banking and financial services world in general.