But that dream is now effectively dead, and blockchain is now fully into its boring phase. The latest and most telling evidence of this arrived this morning, when JPMorgan (JPM) said it had developed and tested a prototype of a digital coin.
JPMorgan’s coin rollout also says something about the broader state of technology in the current economy. Tech’s promise is no longer about replacing middlemen. It’s about middlemen using technology to entrench their profitable position.
The coins, the first of their kind created by a U.S. bank, are a form of an internal stablecoin, meaning they have a constant value equivalent to one U.S. dollar.
In a recent episode of The Readback, Alex Eule is joined by Barron’s associate editor Andrew Bary to discuss the suddenly hot topic of stock buybacks. You can sign up for the podcast in iTunes or wherever you listen to podcasts.
The coins are effectively an internal, digital IOU, which are created after one customer deposits dollars with JPMorgan and destroyed and replaced by dollars after a payment is made using them. Currently, large corporations make global payments using wire transfers between banks, which can take a day or more to clear.
The bank said that using the coin allows for the “instantaneous transfer of payments between institutional accounts.”
So if you have a JPMorgan Chase checking or savings account, the coin is not for you. It’s “exclusively for institutional customers” the bank said in a release.
The bank did not immediately return a request for comment.
Speaking to CNBC, which first reported that the bank had created the coin, JPMorgan’s head of blockchain projects, Umar Farooq, argued that the bank’s global reach meant that even an internal system for institutional clients still could have massive reach.
“Pretty much every big corporation is our client, and most of the major banks in the world are, too,” he told CNBC. “Even if this was limited to JPM clients at the institutional level, it shouldn’t hold us back.”