JPMorgan Has a Coin Now

If you have U.S. dollars in a bank account at JPMorgan Chase & Co., and I have U.S. dollars in a bank account at JPMorgan Chase & Co., and I want to send you 100 of my dollars, what we do is I tell JPMorgan to subtract 100 from the number of dollars in my bank account and add 100 to the number of dollars in your bank account. This gets dressed up in a lot of procedures, because it would be bad if JPMorgan got the math wrong or if it moved money from one account to another without getting the proper authorizations, but as a matter of, like, computer science, it is dead easy. JPMorgan keeps a list of people and how many dollars they have, and you and I both trust JPMorgan to keep that list (that’s what it means that we bank there!), and so we just tell JPMorgan to update the list to reflect the transaction between us.

You could extend this beyond dollars. If I own 100 shares of XYZ stock in my JPMorgan brokerage account, and you have a JPMorgan brokerage account and want to buy that stock, then that whole transaction could take place just by JPMorgan changing some numbers in its computers1: Subtract 100 from the number of XYZ shares in my brokerage account, add 100 to yours, subtract the price from the number of dollars in your bank account, add it to mine. JPMorgan is a giant, stable, widely trusted utility that is in the business of keeping track of a lot of people’s financial stuff for them, which means that for those people their financial stuff—the money in their checking accounts, the stocks in their brokerage accounts, the debts in their credit-card accounts, all of it—is, in some real sense, just a set of numbers in JPMorgan’s computers.