JPMCoin: The Beginning of the End for Ripple

Ripple Nov 02, 2020

In light of the recent announcement by JP Morgan stating that they were going to go full tilt with their 'JPMCoin', this seems like the perfect time to take a trip back in time to when we first started hearing rumblings in the space about J.P. Morgan's impending "stablecoin", as it was dubbed at the time.

More specifically, we're going to take a look at Stellar and Ripple's noticeable (yet unstated) absence from the J.P. Morgan implementation.

Why Does J.P. Morgan's Launch Have to Do With Stellar or Ripple?

This is a fair question for the reader to ask - and this section may provide an answer that's a bit different than what you'd intuitively expect.

A Narrative Destroyed

For years, Stellar Lumens and Ripple (more specifically, the latter), have pushed the theory that their imminent adoption by large financial institutions for cross-border settlements and general transaction settlement was inevitable, given the 'superior' technology imbued in these products.

This line of reasoning epitomizes a blog post released by the Ripple Foundation on their website just a little under two months ago (September 2nd, 2020).

Of note is the following excerpt from the blog post, which asserts:

"Given the current economic landscape, we recently posited that real-time, instantaneous payments are now more important than ever. And there's aw logical extension to this view, centered around the growing necessity and demand for affordable and immediate cross-border payments."

Its questionable as to whether COVID itself increased the need for instantaneous payments (not sure there's a correlation here), but the general sentiment that the financial services industry would be able to better serve their clients with instantaneous payments (vs. what exists now), is one that is hard to disagree with.

However, the blog post does not stop there, going on to expand this premise to conclude that:

"Solving for the glaring deficiencies of the current cross-border payment ecosystem is a challenge that must be overcome. Currently stymied by antiquated systems and a lack of universal protocols and rewgulations, cross-border payments are way more burdensome for the end-user than they should be."

The above paragraph as well as the remainder of the blog post implicitly suggest that the primary issue with the financial services industry is not that there is a resistance to instantaneous cross-border settlements, but rather an inability on their part to manifest an adequate solution.

And, you guessed it - this is the part where Ripple tells us all that they have crafted the ultimate solution to modernize the financial services industry and perhaps finance itself.

Let's check out 'The Pitch':

"To combat this [Cross-Border Payment Problems] the International Standards Organization (ISO) established ISO 20022 as a universal standard to bring legacy payment infrastructures into alignment, but without a fundamental overhaul of these payment infrastructures, ISO standardization can only go so far."

The statement above is a bit curious since ISO standards are meant to be adopted in the present day, which means that Ripple's implicit suggestion that the ISO should've obsoleted all currently used forms of cross-border payments at this very second in favor of blockchain is preposterous.

But this is aside from the main point, continuing on, the blog post then states:

"Ripple's vision is to deliver this technology transformation by establishing a new global payment network called RippleNet, built on Distributed Ledger Technology, and tightly coupled with ISO Standards. Consequently, Ripple has been a leading proponent of ISO 20022 and its mission to enable better global interoperability and an improved customer experience for payments."
"As the de facto global data standard for modern payments messaging between financial institutions and payment systems, ISO 20022 is currently adopted in 70 countries. It’s estimated that 87% of global financial transactions will be supported by ISO 20022 by 2023. This common language helps financial institutions, banks and payments systems streamline processing in cross-border payments as well as strengthen regulatory controls."
"With increased adoption of ISO 20022, combined with the fresh approach made possible with RippleNet’s Distributed Ledger Technology, we can better shape the future of cross-border payments."

How J.P. Morgan Destroyed Ripple's Mythical Reality

J.P. Morgan showed that financial services are capable of coming to all of the same conclusions that Ripple did in their blog post concerning the potential benefits blockchain affords major financial institutions (for a wide array of issues).

The issue here though is Ripple's fatal assumption that their token (Brad Garlinghouse insists its a token) would have to be adopted by financial institutions at some point because:

  1. Its allegedly the best solution available (among all other alternatives ; DLT solutions) for this specific use case.

2 The financial services industry had failed to adequately establish blockchain in any meaningful way up to that point.

And, of course, the biggest oversight of them all: Ripple completely overlooked the possibility of any of these major financial institutions simply electing to craft their own DLT-based mechanism for digital transfers.

This is exactly what J.P. Morgan did.

J.P. Morgan Actually Usurped Ripple With a Less Ambitious Undertaking

To be clear, it is probably technically inaccurate to state that J.P. Morgan effectively built a solution that fulfills the same role as Ripple's.

And that's because Ripple was proposing to be the entire planet's means of financial cross-border financial  settlements (effectively replacing staples like the Swift Network in its current instantiation.

Abstraction of ISO 20022

In order to get a better idea of Ripple's future vision for the financial services industry, let's take a look at ISO 20022.

note: Since the 'ISO' typically charges absurd amounts of money to obtain a copy of their standards, there is a zero percent chance that their standard will be reviewed by Librehash, but if you can manage to find a copy floating around, please send that through so that we can...notify the ISO...after we thoroughly inspect the document & query public opinion to make sure we don't waste their time with an inauthentic knock-off passing itself on as one.

Interesting...despite Ripple's claims that they were a major driving force behind the creation of the ISO standard (which would be quite an accomplishment since these standards are adhered to religiously by some of the world's foremost firms, and ultimately may serve as the benchmark for the efficacy, legitimacy, and desirability of a firm in a financial climate where shifts in such a designation, positively or negatively, could have a substantial impact on the company in question being assessed).

Back to Ripple - specifically their claim that they were the "driving force".

It appears that the ISO website (where that screenshot came from), provides a link directly to Swift's website where interested readers can grab the book on ISO 20022, which is, "Written and offered by the SWIFT Standards Team."



This article doesn't even delve into the actual JPM Coin itself, which is definitely worth examination as it opens up a ton of 'philosophical' questions about whether it should be considered blockchain (specifically if one is of the mind that there are no 'private blockchains').

We'll look into that in the near future here at Librehash. And, to be fair, if we disagree with J.P. Morgan's self-designation of their project as one that leverages blockchain technology, then we need to posit a clear, concise definition that does provide a definition for what blockchain is.

Otherwise, one is in no position to state what it isn't.



Happy to serve and help wherever I'm needed in the blockchain space. #Education #EthicalContent #BringingLibretotheForefront

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