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The Ledger: Ripple and JPM, Coinbase Loves Stake, Mining Blues

When JP Morgan announced plans in February for its own cryptocurrency, I wondered what this would mean for Ripple. The San Francisco crypto company has long touted its favored currency, XRP, as a type of bridge money for financial firms to use in international transactions. Those ambitions could be dashed if most banks decide to use an in-house currency such as the so-called JPM Coin instead.

So is Ripple worried? Apparently not. I put the question to CEO Brad Garlinghouse at the company’s offices last week, and he seemed outright pleased that JP Morgan’s CEO, a famous Bitcoin skeptic, was hatching a cryptocurrency.

“If you told me two years ago that the guy who called Bitcoin a fraud was launching a coin, I would have said you’re on Market Street sniffing fumes,” said Garlinghouse, referring to a San Francisco’s thoroughfare popular with drug users.

Garlinghouse added that he thinks the arrival of JPM Coin is a good thing because it underscores the legitimacy of blockchain technology for money transfer, and that he doesn’t view it as competition for Ripple’s XRP aspirations.

“I don’t understand the value proposition of JPM Coin. Is BoA or Citi going to use a JPM coin?” he said, suggesting the banks’ rivals would probably prefer to use digital coins of their own design. This would, in turn, create a token Tower of Babel and defeat blockchain’s promise of an open and interoperable money transfer system.

Garlinghouse has made this point before and he’s probably right. The big banks’ experiments with digital currency are unlikely to become a lynchpin of worldwide money transfers. That said, it’s unclear if Ripple’s promotion of XRP will achieve this either.

The story of Ripple, as it’s been for years now, is of a company that’s gained traction selling blockchain-based messaging software to banks but has yet to make a clear-cut case for XRP. Ripple’s own interest in XRP is obvious enough—the firm is sitting on a hoard of the stuff, and people who work there will become very, very rich if the financial industry embraces it. But will this ever happen?

Garlinghouse insists that XRP adoption is now for real, adding that Q4 of last year was the first time that Ripple’s finished XRP product was available. He says that eight or ten companies are now using it in commerce and that their ranks will expand to include some giants of the finance industry. As for simply settling for being a successful messaging company, Garlinghouse says that’s out of the question.

“I won’t be happy being a boring software company. Software is a means to an end and it will help drive liquidity of XRP,” he said.

We’ll see. Meanwhile, we’re getting excited as the inaugural edition of Brainstorm Finance in Montauk is now less than three months away and our list of prominent executive speakers keeps growing. Come join us on June 19-20!

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Jeff Roberts
@jeffjohnroberts
jeff.roberts@fortune.com

THE LEDGER’S LATEST

A Crypto Dividend? Coinbase ‘Staking’ Service Offers Fixed Income Investment by Jeff John Roberts

Wells Fargo and Mastercard CEOs Still Skeptical About Blockchain’s Impact by Don Reisinger

How the Best Workplaces in Finance Are Leading the Industry in Innovation by Chris Tkaczyk

Peter Thiel-Backed Crypto Brokerage Tagomi Just Got Its BitLicense by Lucinda Shin

Fess Up: SEC Goes Easy on Cryptocurrency Companies That Cooperate by Robert Hackett

DECENTRALIZED NEWS

To the Moon… Thai consortium CP Group (which is also affiliated with Fortune’s proud new owner) reportedly buys OMG Token backer for $150 million. Charles Schwab offers Netflix-style subscription for robo-advisors. JPM leads Wall Street firms in blockchain job postings. Bitcoin posts biggest quarterly gain since 2017.

…Rekt.  Ethereum is losing its luster. Mt. Gox founder appeals data manipulation conviction. Former lawyer traces Quadriga’s path to lawlessness. Venmo is hiring debt collectors. BoA’s COO is unsure if crypto will ever catch on. So much for Bitmain’s Hong Kong IPO. The carcass of an ICO is up for sale on eBay.

BALANCING THE LEDGER

Click to view^^^

In lieu of Balancing the Ledger, this week we’re sharing my recent interview with Coinbase CEO Brian Armstrong who explained why “stake” is the hot new verb in crypto circles, opined on “crypto winter” and shared his take on what will happen next in the industry.

BUBBLE-O-METER

“My advice to those who die, declare the pennies on your eyes.” New data from Credit Karma says tax filers with short-term bitcoin losses jumped 521% from last year. Those short term losses averaged $3,405while those claiming a long term gain reported an average profit of $15,352.

FOMO NO MO’

Decline of a mining titan. Remember when Bitmain was all but unstoppable? Not long ago, the Chinese maker of crypto hardware was pulling in obscene profits and boasting about dominating the future with AI-powered mining. Today, the company is struggling to stay in business. The South China Morning Post breaks down how it went wrong—including conflict at the top and the failure to retain key staff—and how Bitmain is trying to get its mojo back.

Bitmain’s reversal of fortunes is most obviously reflected by the retrenchments. Since December the company has slashed at least half of its 3,000 jobs, with numerous developer teams and regional offices dismissed altogether, the Post has learned. By the end of this month, it aims to further cut staff numbers to just 1,100, with about 700 people remaining based in Beijing, according to one former employee who viewed the plan.

We hope you enjoyed this edition of The Ledger. Find past editions here, and sign up for other Fortune newsletters here. Question, suggestion, or feedback? Drop us a line.