After bitcoin lost 80 percent of its value and the cryptocurrency market plummeted $400 billion in the span of one year, some analysts speculated the crypto bubble had burst. So when JPMorgan Chase recently announced it had developed its own digital coin, this vote of confidence from the nation’s largest bank appears to have sparked new interest in tokenized cash and its supporting platform, blockchain. Monica Eaton-Cardone, a fintech executive specializing in risk management and fraud prevention, examines the implications of the new JPM Coin and what it is likely to mean for the future of payments.
Bitcoin garnered global attention when its value soared from under $1,000 at the start of 2017 to a high of nearly $20,000 by the end of that year; but it subsequently tumbled over the course of 2018 and is now worth only about one-fifth of its former high. As a result of this volatility, enthusiasm gave way to skepticism when investors and traders began to scale back on their crypto positions. One industry insider even proclaimed that 95 percent of the roughly 2,000 cryptocurrencies in existence today are “useless” and “will die a painful and deserved death.”
However, JPMorgan has taken a different approach by assigning its digital coin a constant value equivalent to one U.S. dollar, which circumvents the wild fluctuations of bitcoin and other cryptocurrencies. JPM Coin also has a very practical goal—it is designed to make instantaneous payments via blockchain technology. One crypto advisor sees it as a significant improvement over the existing Swift transaction network, noting that it is “faster, cheaper and more reliable than the Swift environment,” which he points out has an error rate of over 10 percent.
Ms. Eaton-Cardone, who serves as CIO of Global Risk Technologies and COO of Chargebacks911, is equally optimistic about the new digital currency and describes its launch as “a turning point” in how payments are conducted.
“We currently rely on outdated wire transfers for international payments, security transactions and other activities, even though they can take days to clear and finalize,” she explained. “JPM Coin and its underlying blockchain technology provide secure, real-time execution. Since blockchain offers faster and more accurate recordkeeping, the bank can make better use of staff and other resources. These efficiency improvements have the potential to save substantial sums of money.”
Yet some crypto enthusiasts maintain JPM Coin cannot truly be considered a cryptocurrency—in part because the payment system is private rather than public and uses a centralized structure as opposed to a decentralized one. Meanwhile, others regard these points as benefits and believe they will have a positive effect on the industry as a whole. In any case, JPMorgan is poised to become a major disruptor in the payments sector, and will likely leave other banks scrambling to play catch-up.
As for Ms. Eaton-Cardone, she believes the key takeaway from this development has more to do with the platform than the tokenized coin itself. She believes this high-profile use case will help it finally transition into the mainstream.
“The blockchain technology behind these currencies is the real value proposition,” she asserted. “JPMorgan’s leadership in this arena is an important step forward toward widespread adoption—not just in banking and payments, but in many other sectors, as well. I’m excited to see what the future of blockchain holds, and I suspect many more banks and businesses will be getting on board soon.”
About Monica Eaton-Cardone:
An acclaimed entrepreneur, speaker and author, Monica Eaton-Cardone is widely recognized as a thought leader in the FinTech industry and a champion of women in technology. She established her entrepreneurial credentials upon selling her first business at the age of 19. When a subsequent eCommerce venture was plagued by revenue-leeching chargebacks and fraud, she rose to the challenge by developing a robust solution that combined human insight and agile technology. Today, her innovations are used by thousands of companies worldwide, cementing her reputation as one of the payment industry’s foremost experts in risk management, chargeback mitigation and fraud prevention.
As CIO of Global Risk Technologies and COO of Chargebacks911, Ms. Eaton-Cardone leverages her global platform to educate merchants on best practices in fraud prevention and to spotlight the competitive and economic advantages women can bring to the technology workforce. Her nonprofit organization, Get Paid for Grades, invests in students to inspire a new generation of innovators. Get to know Eaton-Cardone at http://monicaec.com.
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