The research division of top-ranked cryptocurrency exchange Binance has reported that JPM Coin is unlikely to compete with XRP, at least any time soon.
According to analysis published on Mar. 1, the recently announced stablecoin under development by J.P. Morgan Chase, while poised a potential competitor for Ripple’s XRP over the last several weeks, offer “minimal direct competition” for the third largest coin by market capitalization.
Under the title “Can JPM Coin disrupt the existing stablecoin market?” Binance’s research team evaluated the future impact of JP Morgan’s coin on Ripple, stablecoin, and the broader cryptocurrency industry. In regards to Ripple and the XRP coin, the team of researchers concluded that JPM Coin and Ripple are
“currently focusing on improving different aspects of traditional finance. Minimal direct competition is expected between the two in the near term, though this could change depending on how JPM Coin develops to venture out of its current closed network.”
Despite analyst takes over the past two weeks that J.P. Morgan’s coin could spell a death sentence for Ripple, the team at Binance found it unlikely. For one, Ripple has already built a significant head start in terms of providing a blockchain-powered payment platform for financial institutions. As included in the report, Ripple has a client base of over 100 financial institutions and growing. While J.P. Morgan is signaling a refusal to use Ripple’s established blockchain protocol, the JPM Coin is a more likely competitor of current industry standard SWIFT in the realm of cross-border banking transactions.
As pointed out in Binance’s research, Ripple has the advantage of being able to offer a product in RippleNet and xRapid to banking competitors of J.P. Morgan. Considering that the present iteration of JPM Coin is being designed as an internal protocol, it’s unlikely that the technology would be sourced out to other banks such as Citgroup,
However, while JPM Coin does have significant worldwide reach based on J.P. Morgan’s existing client base, the network is currently restricted to these internal clients only. It is highly unlikely that clients of a large competing bank such as Citigroup will be able to settle transactions using JPM Coin, especially if a Citigroup Coin is released in the near future.
In the days following the JPM Coin announcement, Ripple’s CEO Brad Garlinghouse tweeted a critical response to the bank for missing the point of cryptocurrency,
As predicted, banks are changing their tune on crypto. But this JPM project misses the point – introducing a closed network today is like launching AOL after Netscape’s IPO. 2 years later, and bank coins still aren’t the answer
Binance’s researcher seemed to find a similar conclusion to that of Garlinghouse, pointing out that XRP works as a universal mediator between currencies and networks in the xRapid service. While JPM Coin may be limited in reach as a product for J.P. Morgan clients alone, Ripple’s XRP is able to bridge banks and institutions across the globe.
However, Binance does leave the door open for greater JPM Coin competition with Ripple and XRP, depending upon the extent of the banking coins reach in the future,
While there is currently no direct overlap on the functionality of the two initiatives, future developments on the reach of JPM Coin outside of its existing closed network will determine to what degree Ripple and JPM Coin will compete.
Overall, it appears that Ripple and XRP has a far enough head start on J.P. Morgan in the space of blockchain-based transactions, while also competing for a largely different audience, at least in the short term.