- The new platform is an enterprise version of the Ethereum blockchain
- The program allows users to operate smart contracts and automate them
- Medium term tokenization of commodities is helping to create new opportunities for global traders
In what can be called a “Damascus Road” conversion, JP Morgan has developed a blockchain-based platform that could ultimately become the flagship of the investment bank. It should be remembered that JP Morgan’s CEO Jamie Dimon called Bitcoin a fraud in 2017, but recently stated that “blockchain is real.”
Platform to Run on the Ethereum Blockchain
JP Morgan Investment Bank has built a blockchain platform running on the Ethereum blockchain that is being used to tokenize gold bars while enabling miners to earn a premium on global markets.
Dubbed Quorum, the platform shows just how much capacity the disruptive technology still has to change the way business is done in the coming years. The program is an enterprise version of the Ethereum blockchain and allows users to operate smart contracts and automate them based on pre-programmed rules. Commenting on the development, JP Morgan’s head of blockchain initiatives Umar Farooq said:
“We are the only financial player that owns the entire stack, from the application to the protocol.”
J.P. Morgan Chase is one of the largest investment banks in the world, with $25 trillion assets under management has been looking into what blockchain has to offer to eliminate unnecessary maintenance costs and bring the power of smart contracts into their day to day business.
They partnered with Ethereum Enterprise Alliance to build their blockchain infrastructure to develop the Quorum blockchain they’ve adopted and have used battle-tested technology from Core OS called to enable Quorum to achieve desirable properties useful in a private blockchain installation.
Tokenization of Traditional Assets
One aim of Quorum is the tokenization of assets using blockchain technology which will help digitize them and move them to distributed ledgers and help to facilitate their end-to-end visibility. JP Morgan’s Umar Farooq stated that medium-term tokenization of commodities is helping to create new opportunities for global traders. He said:
“There are people outside our firm using Quorum to tokenize gold, for instance, they wrap a gold bar into a tamper-proof case electronically tagged, and they can track the gold bar from the mine to endpoint […] someone will pay a higher spread on that gold versus if you don’t know where it comes from. Diamonds is another example.”
The National Bank of Canada has trialed Quorum in issuing a certificate of deposit for US-based investors while the Monetary Authority of Singapore is also testing the platform for its settlement and clearing system.
Blockchain technology, which is mainly known in the world of cryptocurrencies, is now being used by banks for moving other assets other than cryptocurrencies, with JP Morgan’s Interbank Information Network (IIN) attracting over 100 participating banks.