JPMorgan Chase files patent for payment system similar to bitcoin

The world of bitcoin has been set abuzz Wednesday after it was discovered that JPMorgan Chase has filed for a patent in the United States to establish an anonymous online payment system using virtual currency. Most concur that this is similar to bitcoin, a growing cryptocurrency that has dominated headlines for the past month.

In its application, JPMorgan Chase confirmed that the electronic system would permit its users to make payments anonymously and not have to pay the exorbitant “expense of today’s wiring fees.” Another similarity to bitcoin is the fact that it would institute an imitated “blockchain,” a list of bitcoin transactions that are made public.

It did note, however, that traditional credit cards would remain the preferred method of payment for the next five years or so. “None of the emerging efforts to date have gotten more than a toehold in the market place and momentum continues to build in favor of credit cards,” the patent stated, according to The United States Patent and Trademark Office (USPTO).

The patent for the “web cash” was filed Aug. 5, 2013 and was first reported on by LetsTalkBitcoin.com.

Bank of America report

For the first time since bitcoin was established in 2009, a major Wall Street financial institution has issued a report that essentially confirms the potential legitimacy of the digital currency. The Bank of America Merrill Lynch argued that it may “emerge as a serious competitor” to fiat money in ecommerce and digital money transfers.

“We believe bitcoin can become a major means of payment for ecommerce and may emerge as a serious competitor to traditional money transfer providers,” the organization said in its report. “As a medium of exchange, bitcoin has clear potential for growth, in our view.”

It also mentioned the possibility of bitcoin being in a bubble.

“Is bitcoin a bubble? Assuming bitcoin becomes (1) a major player in both ecommerce and money transfer and (2) a significant store of value with a reputation close to silver, our fair value analysis implies a maximum market capitalization of bitcoin of $15 billion (1 BTC = $1,300),” the company added. “This suggests that the 100 fold increase in bitcoin prices this year is at risk of running ahead of its fundamentals.”

Bank of America issued a series of advantages and disadvantages.

Advantages: low transaction costs, transparency and security, bitcoin supply similar to gold and limited anonymity in the black market.

Disadvantages: instability, hackers, not a legal tender and the possibility of government regulations.

At the time of this writing, bitcoin is trading at just under $900.

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